Senate GOP wants budget changes

Tuesday, January 28, 2003

JEFFERSON CITY, Mo. -- With the backing of business groups, some Senate Republicans outlined proposals Monday to revise Missouri's budget process and limit state spending.

One measure would link the state's revenue estimate, which serves as the basis for its budget, to actual expenditures from a previous year.

Another would require the state to use performance-based budgeting, tying agencies' funding to how well they met goals.

Both measures are supported by the Missouri Chamber of Commerce and the Associated Industries of Missouri. But some members of the Senate Governmental Accountability and Fiscal Oversight Committee questioned the effectiveness of the proposals.

State law already allows for a "detailed-based" budget review of state departments or programs. Bills by Republican Sens. Norma Champion of Springfield and John Cauthorn of Mexico would change the terminology to "performance-based" review.

Overhaul unneeded

Champion's bill, co-sponsored by several Republicans and Democrats, would require creation of an outcome-based evaluation process that could be used by the governor and legislators in proposing and approving the budget.

The change could be integrated into the state's current budget process without need for an entire overhaul, she said.

But Senate Democratic Leader Ken Jacob of Columbia questioned how the state could measure objectives in social service programs or school funding, where success is sometimes subjective.

Gov. Bob Holden said agencies already are being forced to justify their budgets -- even if it's not officially called "performance-based" budgeting.

"We've been holding the agencies' feet to the fire all along, and if they have other ideas how to do that more effectively I'll be more than happy to work with them on those things," Holden said.

Another bill by Republican Sen. Chuck Gross of St. Charles attempts to change the revenue figures on which the state bases its budget.

Currently, officials from the legislative and executive branches work with economists each December to calculate a revenue projection for the fiscal year that begins the following July.

Gross contends the estimates have been significantly off base in recent years. As a result, the state appropriates more money than it takes in and has to make midyear budget cuts.

A review by Senate economist Dan Haug, who previously worked in the state budget office, found that the estimates exceeded actual revenue by an average of 2 percentage points over the past 11 years.

Based on the size of the current budget, each percentage point of fluctuation equals about $60 million, Haug said.

Gross' proposal would limit the state's annual revenue projection to the lesser of the official estimates or 1 percent growth over actual expenditures in the latest fiscal year.

In most years, the 1 percent cap would be used, Gross said. That would cause the state to build a surplus of money, part of which could be saved for years when revenues fall short of projections.

"It should give us a more conservative estimate for budgeting, so we don't overspend," Gross said.

But his proposal was questioned by Jacob, Democratic Sen. Wayne Goode of St. Louis, who is a longtime appropriations committee member, and Republican Sen. Sarah Steelman of Rolla, a former state economist and college instructor. They said Gross' proposal would not account for changes in the state's tax base, including by state or federal tax cuts or tax increases.

Steelman suggested it would make more sense to continue developing a consensus revenue estimate, then subtract from it a fixed amount so that spending is limited and a cushion is built into the budget.

Even if Gross' proposal were adopted, budget writers still could appropriate more money than called for by the revenue cap.

Revenue bill is SB28 (Gross); performance-based budget bills are SB40 (Cauthorn) and SB299 (Champion).

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