Gov. Holden unveils $19.2 billion budget

JEFFERSON CITY, Mo. -- Gov. Bob Holden on Tuesday urged lawmakers to make tough spending cuts to balance the state budget without a general tax increase while protecting education and Missouri's most vulnerable citizens.

Delivering his annual State of the State address before a joint session of the General Assembly, Holden unveiled a $19.2 billion proposed fiscal year 2003 state budget.

For a constitutionally required balanced budget, Holden proposes $480 million in core budget cuts -- with much of the savings diverted to other priorities -- and lawmaker approval to dip into the state's reserve fund to protect another $135 million in spending. Also, for the second straight year, Holden offered state employees no pay raises.

"In formulating the state's spending plan for this year, we are going to have to do what all Missouri families do when they gather around the kitchen table to look at their budgets," Holden said. "We will make some tough choices that will limit state spending to the amount of our protected revenue."

However, Holden said he was committed to preserving programs for children, the elderly and the mentally ill.

"While I have made hard decisions, I am not willing to cut our budget so deeply that we leave our most vulnerable Missourians defenseless," Holden said. "There are services that any just and humane society should provide to those less fortunate, if at all possible."

The governor's budget proposal asks for less money than lawmakers approved for the prior fiscal year -- the first time that's happened since 1982. However, since Holden trimmed $600 million from the existing budget, actual spending for next year is expected to be $150 million higher, assuming that budget projections hold.

The governor also called for a change in how budgets are compiled. At present, once a program is funded for a while, it becomes part of the core budget and is difficult to remove.

"Rather than allowing programs to live forever, I want these programs to sunset unless the Legislature and the governor decide that their value exceeds the cost to taxpayers," Holden said.

Holden made fully funding the formula that distributes state aid to local school districts his top priority. An additional $220 million is needed for that purpose and his plan to raise the money immediately stirred controversy because on its reliance on gambling revenue.

Holden proposed raising $177.3 through increased admission fees to riverboat casinos, repealing the state's $500 loss limit per two-hour cruise, hiking the gross receipts tax on casino operators and allowing the state lottery to operate keno games in taverns and other adult establishments. Changes to how retailers pay their taxes would provide the remainder of revenue needed for the formula.

State Rep. Pat Naeger, R-Perryville, said lawmakers would be making a moral compromise by lifting the loss limit to fund education. The limit is intended to help protect compulsive gamblers from themselves.

"When gambling was brought into the state, one of the selling points was the loss limit," Naeger said. "I can't imagine betting on all these people's gambling losses in order to fund education. I think that is the wrong direction to go."

Approval to tap the state's reserve fund for an array of existing budget items, such as urban mass transit, Amtrak, substance abuse treatment and newborn health screenings, will be another tough battleground for Holden -- one he admitted he may not win.

Two-thirds of the members of each legislative chamber must consent to raid the fund and the money must be repaid within three years. Holden said if approval isn't granted, more programs would be eliminated.

Republicans in both chambers were skeptical of using the fund, which would be nearly depleted.

State Rep. Rod Jetton, R-Marble Hill, said the governor could justify spending some of the fund, but not $135 million.

"I for sure do not like dipping into the rainy-day fund," Jetton said. "I agree with him when he said we got to look at our spending and cut costs. But I look at that rainy-day fund like your retirement fund. Just because things get a little tight around the house, you're not supposed to use all your retirement money."

But Jetton said there were aspects of the speech he liked, including the call for a regular review of spending items.

"I really liked the idea of going back through all the programs and looking at them so that each program has to be re-evaluated every so often," Jetton said.

In addition to the budget and education, the third key area of Holden's speech was on homeland security. Holden called for continued vigilance to combat potential terrorist acts and tough new laws to punish those who make false threats or gouge prices during times of emergency.

"I want Missouri to send a clear message that we will not tolerate assaults on our democracy," Holden said.

Economic development was expected to be the fourth major component of Holden's address but didn't make the final cut. Afterward, Holden said he indirectly covered the subject with his emphasis on education, which he said would yield a more productive workforce and, therefore, a stronger economy.

Senate President Pro Tem Peter Kinder, R-Cape Girardeau, was nonetheless disappointed.

"Given the tough state of the economy, for the governor not to have advanced a stimulus package was of noticeable absence in his speech," Kinder said.

mpowers@semissourian.com

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