Latest budget balancing involves no state layoffs

JEFFERSON CITY, Mo. -- The state will cover a $212 million budget gap without laying off employees by cutting spending and diverting money from intended uses, Gov. Bob Holden's office announced Friday.

Holden had already vetoed or cut $323 million from the $19 billion state budget for the current fiscal year, which began July 1. The latest moves are needed to keep the budget balanced in a dire financial situation, he said.

With the latest withholdings, Holden has cut $536.6 million for the current fiscal year.

Brian Long, Holden's budget director, told reporters in a briefing that while state agencies and universities and colleges will see cuts, existing sources of money including tobacco settlement funds would also be used to meet revenue estimates.

Officials had predicted in January that the state's revenue collections would total $6.8 billion in the current budget year. On Thursday, that estimate was lowered to $6.3 billion, based on actual receipts since July 1.

Part of the newly projected $212 million gap will be covered by $63.5 million from Missouri's share of the national tobacco settlement. That includes $50 million that was to have been sheltered in an endowment remained fund until it grew to more than $1 billion.

The cut in tobacco funding came under immediate attack from a lawmaker and special interest group.

"Missouri's tobacco settlement funds should be used for what they were intended, not to plug holes in the state's bloated budget," said House Minority Leader Catherine Hanaway, R-Warson Woods.

Holden already has withheld $25 million of tobacco funds that had been appropriated for a new state health lab. Legislators also used $127 million from the tobacco settlement to cover a budget shortfall in the 2001 fiscal year that ended June 30. Missouri expects to receive $4.5 billion over 25 years from the national settlement.