Missouri isn't alone experiencing budget problems

JEFFERSON CITY, Mo. -- Missouri isn't alone in experiencing a troubled financial situation, says a report that examined the budgets of all 50 states.

The National Conference of State Legislatures, in a report issued Oct. 31, analyzed budget information provided by state budget officials in mid-to-late October for fiscal year 2002. In 46 states, including Missouri, fiscal 2002 began July 1 and runs through June 30.

NCSL, based in Denver, Colo., is a bipartisan organization that examines issues of interest to state lawmakers.

Bad news

"The news is not good," said the report. "With only a few exceptions, state fiscal conditions have taken a dramatic downturn. Moreover, as legislative fiscal analysts look ahead, the outlook is bleak."

Among the report's findings:

Forty-four states reported revenue below forecasted levels in the opening months of fiscal 2002.

Nineteen states reported spending is currently exceeding budgeted levels.

At least 28 states have implemented or are considering budget cuts or withholdings.

Twenty states may raid rainy-day funds to balance their budgets.

Fourteen states have instituted hiring freezes, travel restrictions and cancellation of capital improvement projects to save money.

State budget director Brian Long said Missouri typically follows national economic trends. If there is a national recession, the state won't be immune from its impact, Long said.

"If the nation is headed there, we are going with it," Long said.

The NCSL report put Missouri among the 31 states that were on target to stay within their fiscal 2002 budgets. However, rising Medicaid costs were listed as a concern that could put the state in the red.

Long said Medicaid is among many concerns, and chief among them is anemic growth in revenue from personal income taxes. That area of revenue, which accounts for a significant portion of the state's income, has grown at only about 4.7 percent as opposed to the 6.5 percent budget officials would like.

"As of right now, we are in balance, which is clearly where we want to be," Long said. "However, we are just barely in balance. We are hanging on to balance with our fingernails."

According to the report, Missouri's first quarter revenue growth was 3.7 percent, less than the 5.4 percent projected growth rate. Individual income was down 1 percent and sales taxes off by 2 to 2.5 percent.

Missouri was among the states to withhold spending for budgeted programs, with about $150 million ordered frozen by Gov. Bob Holden. However, the state isn't looking to its reserve fund in the event additional budget balancing measures are required. Doing so would be difficult since the Missouri Constitution requires a two-thirds majority of the General Assembly to tap the fund and mandates repayment within three years.

While Long said the figure on direct withholdings is accurate, Holden instituted other savings measures, including budget vetoes, suspension of some tax credits and delaying building projects, for a total savings of $323 million.

mpowers@semissourian.com

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