State's budgeting woes to persist next year

Tuesday, July 1, 2003

JEFFERSON CITY, Mo. -- As difficult as crafting a new state budget proved to be this year, the challenge looks to be even greater next year.

To get and keep recent budgets in balance amid declining revenue collections, a combination of spending cuts and the infusion of one-time money has helped keep Missouri government afloat without a major tax increase.

But with approximately $900 million in spending either needing to be replaced or eliminated next year, the state could be running out of alternatives to even deeper cuts.

The Republican majorities in the legislature stuck to their anti-tax stance this year despite the efforts of Democratic Gov. Bob Holden, who attempted to pressure lawmakers into supporting a revenue package by vetoing spending for health care, social services and education, which he rejected twice.

The fight over the $19.1 billion budget for the fiscal year that began today came to an official end Monday morning when Holden reluctantly signed into law revised versions of the four appropriations bills he had rejected.

Holden says the plan is $240 million out of balance -- a claim Republicans dispute -- and as a result he will immediately order spending in that amount withheld, primarily from education.

State budget director Linda Luebbering estimated that deficit combined with the reliance on one-time revenue sources and growth in mandatory spending programs creates a budget hole in the range of $860 million to $910 million.

Approximately $570 million in one-time money, which included the sale of revenue bonds and a late infusion of new federal funds, was used in this year's budget. Mandatory spending, primarily for Medicaid, will increase another $250 million, Luebbering said.

Preliminary estimates show state revenue increasing by $150 million to $200 million in the fiscal year starting July 1, 2004.

"We will have a little bit of growth, but probably now even enough to offset the withholdings we are going to have to do," Luebbering said.

Some GOP leaders, like House Speaker Catherine Hanaway of Warson Woods, said they will continue to hold the line against taxes even if it means additional budget cuts.

"This isn't a time when state government can do everything it wants to do," Hanaway said.

Hanaway said lawmakers will take a closer look at leasing expenses and equipment costs, among other areas.

But one key Republican, veteran state Sen. John Russell of Lebanon, said lawmakers may be out of moves.

"I would be open to additional revenue next year, but I don't know if the people would," said Russell, the Senate budget chairman.

The Missouri Constitution requires any significant tax package to go on the statewide ballot.

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