Governor asks for agencies to make new cuts

JEFFERSON CITY, Mo. -- With Missouri's budget shortfall still growing, Gov. Bob Holden said Thursday he has directed state agencies to make another $60 million in spending cuts.

The state's budget director said government would be working with the "bare essentials" -- canceling equipment improvements, eliminating even important travel and leaving nearly all vacant staff positions unfilled until the June 30 end of the fiscal year.

"We are asking the departments to tighten their belts even more," Holden said.

The latest budget withholding raises the amount of money Holden has cut this year to $127 million. But more cuts -- or new revenue -- will be needed to balance this year's $18.9 billion budget.

Earlier this week, budget director Linda Luebbering said declining tax revenue in January had pushed Missouri's revenue shortfall to $314 million. With unbudgeted spending pressures for such things as Medicaid and court settlements, that shortfall could be $425 million by the end of the fiscal year, she said.

And the shortfall could grow even larger, because there are few signs of reversal for the state's slumping tax revenue, she said Thursday.

Holden has proposed to cover the remaining shortfall through a $480 million bond sale backed by the state's future revenue from its settlement with big tobacco companies. Subtracting various costs and initial interest charges, the bond sale would net about $375 million for the state, of which Holden has proposed to use $350 million this year.

The alternative, Holden has said, would be to cut $350 million from public schools and state colleges.

Republican legislative leaders provided an alternative plan earlier this week that would spare education from cuts and use just $100 million from the tobacco bond money this year.

The Republican plan included an $85 million cut to agencies' equipment, travel and professional contract expenses.

But Luebbering said Holden's $60 million cut is the maximum amount that can be taken from that area.

"We've already clamped down and said, 'Dramatically reduce this to just the bare essentials,"' Luebbering said. "There is no way we're getting any more."

House Speaker Catherine Hanaway said Holden's "substantial withholding" -- although not as large as Republicans had suggested -- was an indication that the Democratic governor was considering the GOP proposals.

"I'm hopeful that it's just one in a series of instances in which he is going to accept some of the alternatives we proposed to him," Hanaway, R-Warson Woods, said Thursday.

Luebbering, who as the state budget director reports to Holden, said some of the other Republican ideas do not appear to be financially sound. Holden also expressed reservations.

"I have got some real concerns as we look into the details of the proposals that there's not real savings there in many of those ideas," Holden said.

Specifically, Luebbering cited a Republican proposal to reduce the beginning cash balance for the 2004 fiscal year that starts July 1 and to spend money this year that otherwise is projected to lapse into the next fiscal year.

The Republican plan included $50 million in savings by delaying until next fiscal year any tax refunds resulting from a Supreme Court ruling that Missouri had wrongly imposed sales taxes on the purchase of equipment used to transmit telephone calls.

The Holden administration already had counted on those tax refunds being delayed until next fiscal year, Luebbering said.

She said Holden wasn't too fond of a GOP idea to withhold $30.5 million budgeted for a new pharmacy building at the University of Missouri-Kansas City. But she said that item was open for discussion.