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Tue December 11, 2012
Missouri Could Lose $1 Billion Over Fiscal Cliff
The Washington-based group Federal Funds Information for States reports defense spending cuts could total more than $1 Billion in Missouri if automatic budget cuts are not averted. Other programs in the state would be hit, too.
Congress and the President are facing a January 1st deadline to reach a deficit-reduction agreement. If they don’t come to terms, billions of dollars of automatic spending cuts and tax increases will be enacted. These are known as sequestration or as it’s been nicknamed by politicians, pundits, and the media the “fiscal cliff.”
The nation is facing this deadline because of moves made in the past to avoid the debt ceiling and delay decisions on how to deal with the federal deficit. Nationwide it would mean $400 billion in tax increases and about $100 billion in budget cuts.
Military Spending in Missouri
The Budget Control Act of 2011 ordered both defense and non-defense spending to be cut if Congress couldn’t agree on other spending cuts before the end of this year. Over the next decade, defense spending would be cut by a total of $500 billion.
Programs For Students Would Also Be Hit
The looming budget cuts are also threatening dozens of programs in the state. Missouri stands to lose nearly $126 million in federal funding in 2013. Some of threatened programs include aid to public schools with a high number of low-income students, special education, and early childhood programs.
Tax Effects Unclear
State and federal tax policies are linked in Missouri. According to the Pew Center on the States automatic tax increases were enacted, the state would feel a hit as taxpayers could deduct more of the federal income taxes they paid on their returns. However, Missouri tax code follows many federal deductions and credit, so if those are reduced, Missouri stand to gain tax revenue.
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