Blunt's budget $239 million out of balance

Sunday, January 30, 2005

JEFFERSON CITY, Mo. -- When Democratic former governor Bob Holden offered state budget proposals that would have required yet-to-be-approved tax increases to balance, Republican legislative leaders accused him of counting on "phantom revenue" that would never materialize.

When Republican Gov. Matt Blunt last week presented a budget plan for the upcoming fiscal year that is $239.2 million out of balance, Democrats accused Missouri's young chief executive of violating the state constitution just weeks after taking office.

"The governor's administration was not prepared, and as a result, he hands us a budget that is almost a quarter of billion dollars out of whack," said Senate Minority Floor Leader Maida Coleman, D-St. Louis. "How seriously are we expected to take the rest of his proposals, many of which are very severe and will negatively impact thousands of Missourians?"

The Missouri Constitution requires the governor to submit a balanced budget to the legislature. If proposed expenditures exceed expected revenue, the governor is supposed to suggest legislative actions, such as tax increases, necessary to generate sufficient money. Holden did just that in 2003 and 2004, although his proposals went nowhere in the GOP-led legislature.

Blunt, however, is adamantly opposed to higher taxes. He plans to fill the hole in his $19.21 billion operating budget by directing state department heads, many of whom haven't yet been appointed, to find further savings within their agencies. Those cuts would be implemented through budget withholdings once the new fiscal year begins on July 1.

Sticking to a campaign pledge, Blunt said the elementary and secondary education and higher education departments wouldn't be subject to withholdings.

However, the constitution only allows the governor to order withholdings when revenue collections are less than the revenue estimates on which appropriations are based. With Blunt budgeting more than he expects to collect, it raises the question of whether his withholding power would be triggered.

Michael Keathley, the commissioner of administration and interim budget director, said that provision won't come into play because of the way the appropriations bills will be structured.

"This withholding is going to be written into the budget bills, which is how the bills will end up balanced," Keathley said.

Missouri Democratic Party spokesman Jack Cardetti said the constitutional murkiness of the situation could encourage those negatively impacted by Blunt's planned back-end cuts to challenge the actions in court.

"He promised Missourians he would balance the budget by withholdings later, but the constitution may not allow him to do that," Cardetti said. "This probably could have been entirely avoided had he taken the fiscally responsible action of simply presenting a balanced budget."

Just getting the budget to within a quarter-billion dollars of being balanced required Blunt to take drastic steps. Because of the legislature's reliance on one-time funds in recent years, spending growth on mandatory programs and other factors, Blunt has already targeted $1.1 billion in core cuts in order to keep overall state spending relatively the same as this year.

Keathley said dealing with basic structural problems in the state budget can no longer be postponed.

"There are no more fund balances to sweep, no budget tricks left," Keathley said. "It is time to pay the piper."

The most controversial component of Blunt's budget -- and from the administration's standpoint, most critical -- calls for cutting Medicaid spending by $626 million. Of that amount, $231 million is state money. The remaining $395 million is federal funding Missouri would forgo collecting.

Even with the massive reduction, the medical insurance program for the poor would still cost $5.3 billion next year and consume 26 percent of the state budget.

Blunt's plan would lower income eligibility for the program from 75 percent to 30 percent of the federal poverty level. It also would eliminate optional services, such for dental, podiatry, vision and hearing care.

Pregnant women, children and the blind would not be subject to the proposed eligibility requirements or lose services. House Minority Floor Leader Jeff Harris, D-Columbia, noted that the elderly are not so exempt.

"We do not believe it is an American value to tell senior citizens, who don't ask a whole lot from the rest of us, that they're not welcome anymore," Harris said.

According to the Department of Social Services, which administers the program, an estimated 89,000 Missourians' would no longer qualify for Medicaid and other 370,000 would receive fewer services.

State Rep. Peter Myers, R-Sikeston, said Medicaid costs have spiraled out of control and need to be contained. Myers sits on the House Budget Committee.

"We have got to reform all of our social programs to help those who need help," Myers said. "The rest of them who are able to need to go back to work."

Blunt also calls for trimming more than 1,000 jobs from the 60,000-plus state government work force. Remaining employees, excluding elected officials, would receive a 1 percent pay increase.

The elimination of the 11 state-run license bureaus, none of which are in Southeast Missouri, will account for 194 of the jobs cut and a savings of $5.1 million. Keathley said the offices are a prime example of government inefficiency.

"Our experience has been these offices cost the state more than they collect in revenue," Keathley said.

The offices will be converted into privately operated fee offices, like the 171 other license bureaus around the state. A vestige of the political patronage system, the contracts for running fee offices typically go to supporters of the governor. State Sen. Chuck Graham, whose district includes one of the state-run offices, blasted the Blunt plan.

"We are growing patronage and growing opportunities for political cronies to get these jobs," said Graham, D-Columbia. "... If this is government reform, I'm scared."

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