Budget woes to remain next year

JEFFERSON CITY, Mo. -- Budget troubles this year will carry over into the upcoming fiscal year for Missouri government, meaning lawmakers must find ways to raise new money or cut spending further.

Based on revised figures released Monday, state revenue may fall as much as $230 million short of projections for the 2002 fiscal year ending June 30, state budget officials told legislators.

That's an improvement over a shortfall estimated at up to $250 million last week.

But the revision does little to ease the ripple effect.

House and Senate negotiators were beginning work Monday on the final version of the budget for fiscal 2003, which starts July 1. That budget has been based on 2.3 percent growth in state general tax revenue compared to this year.

Less than expected

But because this year's revenue are lower than expected, the state will be starting from a lower base next fiscal year. Even if the projected growth rate holds true, state tax revenue would be $235 million less than originally expected.

"That's the crux of the bad news," Gov. Bob Holden's budget chief, Brian Long, told lawmakers negotiating the budget.

But even that budget scenario might be optimistic, Long acknowledged, because next year's actual revenue may be below the 2.3 percent growth rate, which was projected last December.

"There is no reason to think that the growth rate is going to be the same in '03 as we thought it was," said Sen. Wayne Goode, D-St. Louis, a longtime member of the Senate Appropriations Committee. "It seems to me that the shortfall is going to be even worse."

Goode and other budget negotiators began looking at scenarios Monday to raise revenue. But so far, all scenarios would still leave the budget short of balancing, meaning deeper spending cuts.

Legislation passed in different forms by both the House and Senate would raise revenue by at least $49 million by eliminating some business tax incentives and encouraging the payment of overdue taxes during a two-month penalty-free period.

The Senate also has passed legislation allowing bonds to be sold against a portion of the state's expected $4.5 billion in tobacco settlement revenue. Conservative estimates show the sales would generate at least $50 million for next year's budget while sacrificing some revenue in the future.

House-passed legislation would raise an additional $31.5 million through a new tax on pharmacies, which would be used to match new federal money under the Medicaid health care program for the poor and disabled.

The House and Senate must pass the same version of any revenue legislation for it to be included in the budget. The two chambers also must agree on the same version of the budget.

The state constitution requires lawmakers to pass a budget by May 10, one week before the legislative session ends. But a special session could be called if they miss the deadline.