Each taxpayer across Missouri would need to shell out $5,000, compiling a total of $9.1 billion, to help the state pay all of its obligations, according to research by the Institute for Truth in Accounting.

Even though Missouri cannot seek financial relief in a bankruptcy court, the state meets the definition of bankrupt — a lack of assets to pay its bills when they come due — reports the Chicago-based non-profit that promotes accurate and transparent accounting.

Missouri Capitol in Jefferson City

Missouri had obligations of $14.1 billion as of June 30, 2009, but only $5 billion available to pay the bills when they come due, IFTA notes.  The organization used the June 2009 data because it is the date of the latest financial report issued by Missouri.

“The state is going further into debt and the public just doesn’t know about that debt,” Sheila Weinberg, founder and CEO of IFTA, told Missouri Watchdog.

While $5,000 for each taxpayer to cover the $9.1 billion might seem steep, it is not as high as other states, Weinberg said, pointing out the total amount for each taxpayer in Maine is $14,600, $15,600 in Oklahoma, $25,000 in Illinois, and $57,000 in New Jersey.  The amount is lower in Missouri because the state is not required to contribute to the teachers’ pension or retirees’ health-care plans, she said.

Balanced Budget

All of the state’s bills are being paid on time and Missouri Gov. Jay Nixon and the state Legislature have made more than $900 million in cuts to keep the budget in balance, said Missouri Budget Director Linda Luebbering.

While Luebbering did not respond to a follow-up question about what would happen if the teacher’s pension plan could not pay its bills, nor did she respond directly to the IFTA’s research during an interview, she did talk with Missouri Watchdog about how her department views the current state of the Missouri budget.

“We are hopeful that with the budget reductions we will stay in balance for the remainder of the year,” Luebbering said, noting that there is a “bit of a shining light” in some of the state’s most recent economic news.

Even though revenue continued to decline in the latest report, Luebbering said some numbers might be pointing to a turnaround. “We saw an increase in witholding taxes of 2.5 percent in the quarter,” she said.

Leubbering also noted sales tax receipts showed a bit of positive growth. But overall net general revenue declined 9.1 percent to $6.77 billion for the fiscal year 2010, ending June 30th, compared to $7.45 billion in 2009. Revenue dropped by 21.8 percent in June to $492.2 million compared to the same month last year.

Another positive sign is that employment numbers in Missouri continue to improve. For the fifth consecutive month, payroll employment increased in June, according to the Missouri Department of Economic Development.

The state’s non-farm payroll employment increased by 3,600 jobs in June on a seasonally-adjusted basis. Missouri’s unemployment rate fell to 9.1 percent in June, down from 9.3 in May, and 9.9 percent in June last year.

Bond Ratings

Yet another positive indicator for Missouri is that the state is one of the few with a AAA bond rating from all three of the major bond rating agencies, Luebbering said. “The state is managed fiscally responsible.”

Earlier this month Moody’s Investors Service and Standard & Poor’s reaffirmed Missouri’s AAA credit rating. Fitch Ratings reaffirmed the state’s AAA status the week before.  The governor’s office touted in a statement that these ratings, which apply to general obligation bonds, help keep borrowing rates low for Missouri.

Initial revenue projections for fiscal 2011 forecast revenue growth of 3.6 percent, Fitch reported. However, working estimates have been revised downward. Missouri is currently projecting revenue to grow 2.2 percent.

“Missouri has a long record of conservative operations and has consistently displayed a willingness and ability to support fiscal balance,” Fitch said. “The state’s financial flexibility and liquidity position remain healthy.”

By Brian R. Hook, brhook@missouriwatchdog.org, (314) 482-7944