No layoffs planned under latest budget balance moves

Associated Press WriterJEFFERSON CITY, Mo. (AP) -- The state will cover a $212 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.

"These are challenging economic times, times that have thrown the budgets of state governments into full-scale crisis," Holden said in remarks prepared for delivery at a noon news conference.

"We believe these actions will keep our state budget in balance for the rest of the fiscal year, as our constitution requires and as our citizens expect."

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.

Most 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 governor decided it was time to put these funds to work for the state immediately," Long said.

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.

State agencies will see their budgets cut by $57.5 million while colleges and universities will see reductions of $18.8 million. Another $42 million would come from federal government transfers while another $30 million would be taken from some of the 400 funds that exist in the Missouri treasury.

Exempt from the latest cuts is the basic funding formula for elementary and secondary schools, which also was spared cuts during Holden's previous budget withholdings.

Long said issues involving the tobacco money and existing state funds that include agency trust funds may have to be worked out with the Legislature.

A recession worsened by the Sept. 11 attacks has caused state tax revenues to fall significantly below projections.

Long said Holden decided to use existing funds to balance the budget to avert deeper cuts that could have forced agencies to reduce staffing. including layoffs.

"It was extremely difficult to avoid layoffs this time around," Long said. "It was a very close thing."

Still of concern is an economic stimulus package making its ways through the U.S. House that could cost the state an additional $70 million, which could lead to layoffs, Long said.

Holden also raised concerns about layoffs if economic conditions continue to deteriorate.

"Whether that step will eventually be necessary will depend on the future state of the economy, how well we manage the current round of reductions, and the impact of factors beyond our control such as the federal economic stimulus package."

Cuts announced in late August, for example, saved money by leaving open hundreds of vacant state positions and canceling expenditures for such things as new computers, job training and some traveling. Similar state cuts are included in the recent announcement.

------On the Net:

Gov. Bob Holden: http://www.gov.state.mo.us