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Opinion: Less money? Spend less

Friday, May 17, 2002

By Catherine Hanaway

JEFFERSON CITY, Mo. -- Missouri, like the nation, is experiencing a recession. State government has collected less than expected in taxes, because Missourians are earning less money than they expected.

As a result, the state has less money than it expected for the final 45 days of the fiscal year. The governor and the legislature are faced with two options to pay the state's bills:

1. Use deficit spending for daily operation, and go into debt.

2. Get control of spending and use conservative cash management through the end of the year.

Since the beginning of the year, the governor has been asking us for the family credit card so he can put the state in debt to cover spending levels that were approved before the recession took hold. Gov. Bob Holden's favorite proposal has been to open up the state's Rainy Day Fund, created to cope with natural disasters. It has been used only once -- for the catastrophic floods in 1993.

First, in January, the governor proposed a budget with $362 million in red ink.

To cover the deficit, Holden asked for four tax increases, an expansion of gambling and use of the Rainy Day Fund in next year's budget. In a politically calculated maneuver, he took state programs for the mentally ill and the elderly out of the state's core budget and moved them into his Rainy Day Fund proposal.

Wisely, the legislature restored those critical programs to the state's core budget without using the Rainy Day Fund.

The legislature said no to deficit spending covered by the Rainy Day Fund, which could be needed at any time to deal with a flood, earthquake or other disaster. The legislature voted for fiscally responsible budgeting, long a hallmark of Missouri government and the basis of the state's excellent credit rating. Historically, Missouri has limited the use of debt to capital improvements, which is a wise policy.

The governor is the chief executive officer of the state and the only person with the responsibility to balance the budget and the power to make any line-item vetoes or withholdings he deems necessary to balance the budget. He has revised his state revenue estimate at least four times so far this fiscal year. The last two have constituted emergencies, but he would rather borrow from the Rainy Day Fund than rein in the budget.

With his first plan a failure, what is Holden's Plan B? Sadly, he doesn't have an alternative. For the next 45 days, he again seeks to borrow and spend $120 million from the Rainy Day Fund. The state must then repay that loan with interest over the next three years. So, instead of dealing with a temporary and limited shortfall in income by setting our house in order, as families must do when necessary, the governor's position is "Give me the credit card and vote higher taxes."

To try and win approval for using the Rainy Day Fund this time, the governor targeted elementary and secondary education and threatened to withhold the last foundation formula payment of the fiscal year as political leverage. He didn't make good on this threat but is now threatening higher-education payments and state employee layoffs and furloughs.

Rather than deficit spend, Republicans propose that we close out the next 45 days by using funds already budgeted but expected to lapse, instead of furloughs and higher education and nursing home cuts.

The governor's job is to bring revenue and spending into line. The legislature will not allow him to use red ink and borrowing to avoid doing his job. House Republicans refused to give in to his political threats.

Our constitution requires a two-thirds vote in order to use the Rainy Day Fund. This protects the fund from being spent on things that are not true disasters. If we spend the Rainy Day Fund now, we are left without a safety net in the event of a flood or terrorist attack. We are having floods now in Missouri, and we may well need this fund for its intended purpose.

Time and time again, the governor has warned the state that we have a budget crisis. Yet, time and again, he has spent like the state is flush with money: He held a million-dollar inaugural party that ran up debts so large it took months to raise the money to pay the bills.

When he became governor, he flew around Missouri unnecessarily in a new, expensive state jet. The flights stopped after the news media reported on the costs of the travels. Since the House voted against using the Rainy Day Fund last week, he has begun a statewide anti-Republican PR campaign.

He expanded his own staff to include a cabinet director, more lawyers and even an executive chef for the governor's mansion.

And now he wants to use the people's credit card as he sees fit, along with tax increases.

As the former state treasurer, Holden should know better. Spending our Rainy Day Fund instead of making responsible choices is not the answer, and fiscal restraint is not the enemy. You can't spend yourself rich, and you can't spend your way to a balanced budget.

Catherine Hanaway of Warson Woods, Mo., is the minority floor leader of the Missouri House of Representatives.

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