House budget chair refuses approval of state revenue estimate

Wednesday, January 15, 2003

JEFFERSON CITY, Mo. -- When Gov. Bob Holden presents a budget Wednesday, there will be no agreement on how much money the state has available to spend.

For the first time since a "consensus revenue estimate" system was developed a decade ago, there is no consensus.

Incoming House Budget Chairman Carl Bearden has refused to sign off on the estimate developed by economists and agreed to by the Senate and governor's office.

The revenue estimate serves as the foundation for building a budget. If officials agree on how much money is available, then they can focus debate on how to spend that money.

There is little immediate harm from Bearden's refusal to go along. Holden planned to present a budget reflecting the projection on which he and the Senate agreed for 2.5 percent growth in general revenue.

But Holden's budget chief, Linda Luebbering, said if the two parties can't come to agreement before the General Assembly starts having hearings on the budget bills, "then it's going to become a little bit more of a problem."

Two concerns

Bearden has two concerns. First, he is reluctant to sign off on anything until he officially is appointed the Budget Committee chairman, which could occur later this week.

Second, and perhaps more importantly, Bearden has concerns about the method by which the state arrives at its revenue projections. In recent years, the state has overestimated revenue, causing the budget to be too high and cuts to be necessary.

For the 2002 fiscal year, the state based its budget on an estimated 5.6 percent growth in general revenue, which consist of such things as state income and sales taxes. In reality, general revenue declined 3.5 percent that year.

A similar situation is shaping up this year.

The budget for fiscal 2003, which ends June 30, assumed 3.1 percent growth over last year. But economists now say it looks like revenues will again fall, by more than 3.1 percent.

For the fiscal 2004 budget, which Holden and lawmakers will be working on this year, state economists have forecast 2.5 percent growth over the current year's decline.

"It is clear that the process is broken and that something should be done to fix it," Bearden wrote in his letter, advocating a "conservative approach to establishing an agreed upon revenue base."

The problem, according to Bearden, is that state budgets allocate all of the projected revenues. So when revenue projections fall short, cuts must occur to the planned spending.

Senate Appropriations Committee Chairman John Russell said he signed off on the revenue estimate partly because he has neither the expertise nor time to prove it right or wrong. Russell, R-Lebanon, hopes to avoid a debate about how much money the state expects to receive.

Revenue debates used to be common before the consensus estimate was developed near the end of Republican Gov. John Ashcroft's administration. Before then, the House, Senate and governor's office all came up with their own revenue projections. So they sometimes differed on whether the state had enough money to meet proposed expenditures.

Even with a consensus revenue estimate, officials know nothing is too certain.

"It would be nice if we could all say, 'This is what it is,"' Russell said. "But the truth of the matter is we cannot say the consensus revenue estimate is 100 percent accurate to the 100th percentage point."

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