Mo. governor announces $200M in additional cuts

JEFFERSON CITY, Mo. -- Gov. Jay Nixon cut an additional $204 million from Missouri's budget Wednesday and eliminated nearly 700 jobs in attempt to offset a continued decline in state tax revenue.

The wide-ranging cuts will reduce busing aid to public schools, Medicaid payments to some health care providers and subsidies to the arts and humanities. Grants for life sciences research will be eliminated, funding for the state's online school will be halted during the second semester, and no new clients will be accepted for certain mental health care services.

"These restrictions have become necessary due to declining state revenues caused by the ongoing national economic downturn," Nixon said at a Capitol news conference.

The latest round of cutbacks raises the total eliminated by Nixon to $634 million out of $23.7 billion approved by lawmakers for state operations and capital improvements during the current fiscal year. About 2,300 full- and part-time state employee positions now have been eliminated, either by the Nixon or legislators.

Nearly all states are struggling financially because of sharp declines in income and sales taxes caused by high unemployment rates and a falling consumer spending during the recent recession.

Missouri revenue was down 10 percent through the first quarter of its budget year, which began July 1. Nixon said Wednesday that revenue is expected to improve but still likely will end the fiscal year more than 5 percent below last year, marking a second straight year of decline. More budget cuts remain a possibility in future months, he said.

House Budget Committee Chairman Allen Icet said some of the cuts announced by Nixon appear to be prudent, though he added that he hates to see that children could lose access to an online education during the middle of the school year.

"My one concern is has he actually been aggressive enough, given where we are year to date" with the state's finances, said Icet, R-Wildwood.

Even though education and health care are affected by the latest cuts, Nixon stressed that there is no reduction in basic aid for public K-12 schools, colleges or universities and no eligibility restrictions for Medicaid recipients.

He said students still could take online classes through the state, but only if local districts paid for it.

Nixon's budget director, Linda Luebbering, said the state will cut $32.5 million from Medicaid. But she said it was too soon to know how much of that would come from reduced payments to health care providers versus other cost-saving measures such as a greater reliance on generic prescription drugs. She said provider payments would be reduced only for services in which Missouri's Medicaid reimbursement rate is higher than that of the federal Medicare program.

Nixon also emphasized that no prisons will be closed nor guards laid off, although he said the Department of Corrections may leave some guard vacancies open longer to save money.

Of the nearly 700 positions being eliminated, 493 are part-time and the rest full-time. Nixon said he opted against furloughs because they wouldn't have saved as much money.

None of the latest cuts will come from the governor's office -- a decision criticized by Icet as a failure by Nixon to lead by example. Nixon said his office took a 5 percent reduction previously.

Some interest groups already have been urging Nixon to reconsider his cuts.

After the Division of State Parks and Historic sites announced the elimination of 100 positions last week, an association of parks supporters suggested this week that Nixon should consider an alternative of temporary park closures, employee furloughs and job-sharing arrangements.

"Our association will support necessary actions to reduce costs, but we feel this must be achieved without causing extreme hardship to the dedicated staff that is largely responsible for Missouri's park system being rated as one of the best in the nation," said Susan Flader, president of the Missouri Parks Association.

Nixon said Wednesday that he appreciates the group's suggestions but still believes the layoffs are necessary.