MANY FACETS MAKE 1996 BUDGET TIGHT

Even though Missouri's economy is growing and state revenues are on the rise, growing needs in many areas of state government and increased federal mandates will make this year's budget process challenging.

State legislators will begin this week digging into the details of a $12.836 billion budget proposed by Gov. Mel Carnahan last week.

"We think this is a solid budget," said state Budget Director Mark Ward.

Of the total budget, $5.491 million is from general revenue.

Fiscal year 1996 begins July 1, and lawmakers have until around the first of May to approve the budget.

Ward explained that in drafting the document conservative revenue estimates were used and an attempt was made to free up some new funds by making core cuts in budgets.

Ward said some one-time money is available for budgeting in FY-1996 that officials were careful to match with one-time expenditures such as upgrading technology or for capital improvements.

The consensus revenue estimate for FY-1996 is for growth of 4.5 percent. The revised growth estimate for the current fiscal year is 5.5 percent.

In the current fiscal year, Ward pointed out that state income is up $59 million because of growth over the forecast for this fiscal year.

In the new budget, Ward said the total revenue growth of $257 million and $58 million in core review savings left budget planners with $315 million for new decision items. But of that amount only $27 million is actually available for enhancements.

There are $255 million in mandatory increases, plus $10 million to fund tax cuts and an additional $23 million for court-ordered desegregation.

Among the mandatory increases are new Medicaid costs of $73 million, $55 million for criminal justice needs, and $42 million in additional compensation and retirement.

The budget also calls for shifting funds to the capital improvements budget to pay for $272 million in new construction for 6,504 additional adult prison beds. That would be done with one high security facility that would be paid in cash, one high security facility funded by lease/purchase, and taking a pay-as-you-go approach to expanding some existing correctional institutions.

Prison overcrowding has reached serious proportions in the state during the last year. The new beds are in addition to what will be funded by a bond issue approved by voters last August.

Ward said state officials have made a concerted attempt to free up money by trying to do things more efficiently and looking at alternatives such as the privitization of some mental health facilities in the state.

"I think what we have done is tried to focus on things we need to do," said Ward. "A lot of the things we are doing in this budget is an effort to make government operate more efficiently."

Overall in the proposed budget, Ward said there are 320 less employees over what was budgeted for the current fiscal year. That reduction is being made, even though there are 650 new employees budgeted for the Department of Corrections.

Funding for elementary and secondary education is scheduled to increase by $190 million or 18 percent, which Ward said would meet the goal of being at 75 percent of full funding of the new school foundation formula in the next fiscal year.

The budget includes $334.4 million in funding for desegregation in St. Louis and Kansas City.

The state is seeking some relief from the U.S. Supreme Court, but the state budget is based on the status quo. "Any decision from the court may or may not have an immediate impact on state funding," said Ward.

Ward said new federal mandates account for $79 million worth of increases in the general revenue budget and $112 million of increases for all funds.

Gov. Mel Carnahan noted in his State of the State address that "fully 25 percent of our state budget is consumed by these required federal programs that we get the bill for."