Lawmakers expect another budget crunch

Monday, October 28, 2002

JEFFERSON CITY, Mo. -- Budget writers in the legislature say all options for ending Missouri's continuing financial problems will be up for discussion in January when work begins on the next state spending plan.

Natural growth in mandatory spending programs coupled with the absence of one-time funds lawmakers used to balance this year's budget will leave the legislature scrambling to come up plug a hole of at least $400 million for the budget year beginning July 1, said state Sen. John Russell, R-Lebanon.

"With receipts down and demand for further growth in the budget, we are in trouble," said Russell, the Senate Appropriations Committee chairman.

The budget for this fiscal year, FY 2003, was the first in years that reduce spending from the previous budget cycle. It was precariously in balance when signed this summer by Gov. Bob Holden, a Democrat. However, it may not stay that way.

Linda Luebbering, Holden's budget director, said collections for FY 2003 are already running $67 million behind projections.

"It is very possible we will need to do additional withholdings to get the budget back in balance," Luebbering said.

Holden withheld $826 million in authorized spending from the FY 2002 budget, primarily from higher education. Lawmakers further reduced spending by $892 million for the current budget.

Running out of fingers, toes

As state Rep. Carl Bearden, R-St. Charles and a member of the House Budget Committee, put it: "We plugged the dike with our fingers and toes, but we are running out of fingers and toes."

Of the state's $19 billion state budget, approximately $11 billion comes from federal money or earmarked funds over which lawmakers have little or no control. After tax refunds in excess of $1 billion, only about $6.8 billion is left in general revenue, the state's most flexible funding source.

But with roughly $5 billion in spending on "hard to cut" items like Medicaid and funding for local schools, budgeters have only approximately $2 billion with which to work.

State Sen. Chuck Gross, R-St. Charles, said lawmakers would reconsider some laws that earmark funds for certain programs and departments that at the moment are cut-proof, and make them compete for funding with other, in some cases more important, state needs.

"We have to put everything on the table," said Gross, an appropriations committee member.

Gross also suggested lawmakers revamp the overall budget process. At present, previously approved spending is rarely revisited, with departments requesting additional funds on top of what they received the year before.

Departments should be forced to justify their previous spending, called the core budget, each year before asking for more money, Gross said.

"Once we go through their core, then we would look at new spending," Gross said.

Doing budgets every two years instead of annually is another option, Gross said, and one that could help hold down yearly funding increases.

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