Officials warn of more cuts in next state budget

JEFFERSON CITY, Mo. -- Tight budget alerts have been coming from Missouri's Capitol on a seemingly daily basis. Yet just how dire are the state's finances?

From the perspective of budget writers, it's as if the present fiscal year simply never existed.

"It has occasionally been described as we missed a year of growth," said state budget chief Brian Long.

For the first time in at least two decades, budget officials are forecasting state tax revenues to decline from the previous year.

Net general revenues for the fiscal year that ends June 30 are projected to be 0.6 percent lower than last year. That's a stark drop considering the original projection of 5.6 percent growth, which already had been lowered to 2.9 percent in August.

Gov. Bob Holden wants to fully fund the growth in the foundation formula for public elementary and secondary schools, which would require about $220 million.

That alone would more than erase the expected growth in state revenues. Yet there are many other state needs.

The Medicaid health-care program for the poor and disabled is expected to need nearly $240 million more than this fiscal year, Long said.

Another $140 million is needed to meet expenses in areas typically considered mandatory, such as prisons, mental health treatment centers, state employee health care and early childhood and special education programs, Long said.

Little leeway

That list doesn't include money for security improvements made after the Sept. 11 attacks. No estimate is available. "The budget situation doesn't give me a great deal of leeway," Holden said. "I'm trying to use every dollar that we've got to its maximum benefit and use every dollar we can leverage to get other dollars involved in the same cause, if it's appropriate."

The budget office is projecting 2.3 percent growth in net state general revenues, drawn mainly from various forms of income and sales taxes and offset by tax credits and refunds.

General revenues comprise about 42 percent of the state budget but form the most flexible pool of money. The rest of the state's money is split fairly evenly between federal funds and single-purpose state revenues, such as the dedicated taxes for the transportation and conservation departments. The 2.3 percent growth projection is compared to this year's stagnant rate. That means the fiscal 2003 budget will have less money than had been expected for this fiscal year.

In real dollars, the budget office is expecting net general revenues to rise $150 million compared to this year.

Yet Holden's budget staff has identified about $600 million in new expenditures. That means money will have to be cut from one program to fund the expansion of another, Long said.

Senate Appropriations Committee Chairman John Russell said, "It's going to be very tight and very difficult to do any more than just essential services, meaning health and welfare, meeting the public debt, funding the public schools and providing revenues for the judiciary and Corrections Department."

In government lingo, budget cuts traditionally have meant a reduction in the growth that state agencies had requested. But now, budget cuts could mean a reduction in real dollars.