Missouri’s Constitution requires the legislature to not allocate more money than is received in revenue. Like the majority of states, Missouri uses a consensus approach for estimating the state’s revenues in the upcoming fiscal year. This approach involves the governor and both chambers of the legislature agreeing to a common estimate of the state’s revenue. Consensus estimating is one of five practices commonly used by states to create an accurate and widely accepted estimate. There are many factors that can lead to a difference between the revenue estimate and the actual revenue; one common factor is changes in income tax revenue (the largest single general revenue source).
- Underestimating revenue can result in ineffectively using all of the funds available to the state, while overestimating can result in budget cuts partway through the fiscal year.
- The consensus revenue estimating process in Missouri is a norm not required by any statute, but has been used most years since 1987.
- Errors in Missouri’s revenue estimates follow national trends and tend to be strongly correlated to changes in income tax revenue, which can be highly variable.
- Missouri does not make all revenue estimating meetings, or meeting notes, open to the public.
- Researchers have not agreed if consensus approaches produce more accurate estimates. However, they have been shown to increase broad acceptance of estimates as opposed to a single branch of government deciding the estimate.