Government panel considers two-year budgets

JEFFERSON CITY, Mo. -- For the last 40 years, Missouri government has operated on yearly budgets. It wasn't always the case, however, and from time to time it has been suggested that the time-consuming -- and often politically charged -- process of crafting a state spending plan might go more smoothly if Missouri returned to two-year budgets.

The idea is being kicked around by the Missouri State Government Review Commission, which Gov. Matt Blunt formed earlier this year to search for ways to streamline state operations. It is just a concept at this point, however, and may not be part of the recommendations the commission intends to present to the governor later this year.

Commission co-chairman Stephen Bradford of Cape Girardeau said returning to biennial budgeting hasn't been suggested at any of the public hearings the panel has held around the state. But Bradford said there has been informal discussion of it among some commissioners.

"The main issue is can you be successful in crafting budgets two years in advance?" Bradford said. "It comes down to whether the executive and legislative branches think they can do it."

Although annual budgets are the standard practice, the Missouri Constitution already empowers the legislature to pass two-year spending plans if it so chooses.

Shifted in 1965

Because the legislature used to hold regular sessions only in odd-numbered years, biennial budgeting was done out of necessity.

Former Gov. Warren Hearnes of Charleston shifted Missouri to annual budgets in 1965. However, that required special sessions to be held in the off years to pass the budget and keep state government in business. The legislature finally went to annual regular legislative session in 1974, largely because of the move to yearly budgets.

Wayne Goode of Normandy, a Democrat who served in the legislature from 1963 to 2005 and chaired both the House and Senate budget committees, said the growing influx of federal money into Missouri's budget during the 1960s -- and the unpredictability in how much that money would be two years out -- was part of the impetus for annual budgets.

"If that argument made sense 40 years ago, it certainly makes sense today with the relationship to the federal government," Goode said. "The amount of federal money was a very small back then."

Federal money accounts for nearly a third of Missouri's $19.2 billion state operating budget for the current fiscal year.

When the budget process begins in the legislature each January, lawmakers have to estimate how much the state will have to spend during the upcoming fiscal year that ends 18 months later. And by the time the legislature goes to work, state agencies have already spent about six months calculating their budget needs.

Making revenue predictions 18 to 24 months in advance has proven tricky in recent years due to economic downturns. With biennial budgets, the forecasting would have to be done 30 to 36 months out.

That hasn't proven a problem for neighboring Arkansas, according the Richard Weiss, director of the Arkansas Department of Finance and Administration. The state's legislature meets only every two years and uses biennial budgets.

"One of the upsides is the fact that we always are working about four years ahead, so you get a greater sense of continuity than if you chop it up year by year," Weiss said.

The Arkansas governor does have the power to a call a special session during an off-year if budget corrections need to be made. Weiss said that has been rare in recent years.

The fact that lawmakers don't have the opportunity to ratchet up state spending each year has helped Arkansas maintain a conservative budget, Weiss said. But because the legislature isn't around every year to make decisions, the state's budget department is vested with much more power than is the case in Missouri.

"It seems to work very well," Weiss said. "It puts a lot of responsibility and accountability on us."

mpowers@semissourian.com

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