Amy Blouin, Executive Director

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The State of the StateEconomic Conditions in
Missouri October 2008

• Amy Blouin, Executive Director
• The Missouri Budget Project
• www.mobudget.org
• Andrew Nicholas
• Center on Budget Policy Priorities
• www.cbpp.org

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Where We Stand Economic Conditions

• Stock Market S P 500 dropped 37 in 2008
  Major Financial Institutions Bailout and
  Credit Bubble
• Missouri Lost more than 20,000 Jobs in 2008
• Missouri Unemployment Rate Reached 6.7 in August
• Increase in Long Term unemployed and
  underemployed workers
• (US Bureau of Labor Statistics)

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Where We Stand Economic ConditionsIncome Wages

• The median income in Missouri was 45,924 in 2007
  approximately 5,000 lower than it was in 2001
  2nd highest decline
• At the same time, costs to care for a family are
  increasing dramatically gas, food and health
  insurance inflation
• Families USA Report Health Insurance Premiums
  increased at a rate of 4.5 times the average wage
  increase in the last eight years
• 742,000 Missourians live in poverty, up from
  659,000 in 2006, an increase of 12 percent in one
  year
• (Poverty Income Information from the US Census
  Bureau)

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Where We Stand Economic ConditionsEmployment

• Over the same period of wage decline, the Gross
  State Product grew by 8.5
• First time on record where wages were stagnant
  despite productivity growth
• Missouri had the 22nd largest GDP in the states
  in 2007 Largest Contributors
• Manufacturing 13.3
• Government 12.1
• Real Estate 10
• Employment Insecurity Benefits Insecurity
• (GDP Information from EPI and MERIC)

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Where We Stand Compared to Last Crisis
Employment (BLS Data)
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Where We Stand Compared to Last Crisis Medicaid
(Missouri DSS Data)
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Where We Stand Compared to Last Crisis Food
Stamps (Missouri DSS Data)
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Where We Stand Compared to Last Crisis Child
Care Assistance (Missouri DSS Data)
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The Growth of Income Inequality Amy Blouin, The
Missouri Budget Project Andrew Nicholas, Center
on Budget Policy Priorities
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Income Inequality Worsened over the Last 20
Years.
Bottom 20
Middle 20
Top 20
Top 5
Income change by Family Income Group, Late 80s
Mid 00s
Source CBPP/EPI, Pulling Apart A State-by-State
Analysis of Income Trends, April 2008
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But Accelerated during the Past Decade
Bottom 20
Middle 20
Top 20
Top 5
Income change by family income group, late 90s
mid 00s
Source CBPP/EPI.
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15 States with fastest-growing income gaps
Source CBPP/EPI.
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More recently
Source CBPP/EPI.
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Primary causes (2)
Source CBPP/EPI.
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Source Leonhardt, David, Next Victim of Turmoil
Maybe your Salary, New York Times, October 14,
2008.
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Growth in the stock market
Projection
Actual
Source Congressional Budget Office
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In Missouri, Inequality Increased over the Past
20 Years
Bottom 20
Middle 20
Top 20
Missouri Income change by Family Income Group,
Late 80s Mid 00s
Source CBPP/EPI, Pulling Apart A State-by-State
Analysis of Income Trends, April 2008
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But Accelerated during the Past Decade
-5.6
Top 20
Bottom 20
Middle 20
Missouri Income change by family income group,
late 90s mid 00s
Source CBPP/EPI.
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Where We Stand 2008 vs. 2001 Investments in
Services

• Health Care
• The number of uninsured Missourians increased by
  3.5 between 2001 and 2007.
• Missouri now has 729,000 uninsured (US Census).
• Higher Education
• Missouri Colleges and Universities received
  roughly the same amount of state support in 2008
  as they did in 2001 (771 million in FY 2008 vs.
  767 FY 2001),
• When inflation is taken into account, Missouri
  Colleges and Universities in 2008 were 140
  million behind their 2001 funding levels,
• Tuition has increased by 75 as a result.
• K-12 Education
• Recent funding increases are just meeting the
  2005 School Funding Formula requirements,
  increasing by about 4 per year, slightly more
  than inflation.
• More than 1 billion below the adequacy
  standard

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Where We Stand Missouri FY 2009 Revenue (First
Quarter Totals- Missouri Office of Administration)

• Overall General Revenue Collections have
  decreased by 0.9 percent in FY 2009
• Individual Income Tax Collections grew by 2.3
  percent in FY 2009 First Quarter, but declined in
  September by 2.6 percent
• Sales and Use Taxes declined for two quarters in
  a row, and 3.6 percent in FY 2009 to date
• Corporate Income Franchise Tax declined by 11.7
  percent in the first quarter of FY 2009.
• S P 500 decline ties to stock market decline
  as major contributor in 2001 State fiscal crisis.
  (S P 500 Data)
• The trends indicate concern for revenue stability
  at a time when need for investment in state
  services is increasing.

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Structural Deficit Opportunities

• Short Term
• Federal Fiscal Relief 2nd Economic Stimulus
• Direct Grants to States
• Enhance Federal Medicaid Matching Rate, similar
  to 2001 crisis
• Extend Unemployment Benefits
• Center on Budget Policy Priorities many
  resources on federal assistance at www.cbpp.org

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2009 State Legislative Session Opportunities

• Evaluate Long-Term Sustainability of State
  Revenue Sources Modernize Missouris tax
  structure to fit the new economy
• State Economic Stimulus
• State Earned Income Tax Credit
• Health Care
• New Economy Workforce Development
• Work together to build a Missouri that supports
  healthy communities and a productive economy
• Join the Missouri Budget Project action network
  at www.mobudget.org