State budget outlook called 'bleak'

JEFFERSON CITY, Mo. -- State government is facing a financial crisis that is the most serious in a generation, according to a report released Thursday by a former state budget director.

"The state's future budgetary outlook is in fact quite bleak," perhaps even more pessimistic than had been represented by state forecasters, according to a report by the consulting firm of James R. Moody and Associates.

Moody is a former state budget director and head of the state Office of Administration who wrote the report with Joseph Cavato, a former planning director for St. Louis County.

The report was commissioned by the St. Louis Regional Chamber and Growth Association, which plans to use it as justification for its legislative agenda.

But the report also serves as a counter to one released earlier by the state Chamber of Commerce, which said that, despite warnings of a tight budget, state revenues and expenditures have grown significantly.

Moody criticized the methodology of the chamber report, concluding that while revenues and spending did grow during the 1990s, they did not grow exponentially.

Furthermore, the current recession has combined with still increasing spending demands to create "an impending financial crisis that has not been seen in more than 20 years," Moody's report said.

Gov. Bob Holden has cut nearly $600 million from the state budget and his analysts expect the state's general revenues to decline 0.6 percent for the fiscal year that ends June 30, when compared to the previous year.

So far, however, that decline has not materialized.

State revenue up

Through November, state revenues were up 3.7 percent over the previous year, said state budget director Brian Long.

Given that, the Chamber of Commerce said, both the administration and Moody may be exaggerating the state's financial woes.

"There is a lot of talk right now of low state revenues, and we aren't seeing that in the actual data so far," said Ray McCarty, director of fiscal affairs for Missouri Chamber of Commerce. "We don't think it's responsible to say the state is having a tough time with its money."

Long said the 3.7 percent growth of past months is deceptive. Because of recent job losses that will affect state income taxes, and various other factors, the state's largest revenue hit should occur in early 2002.

Officials in Long's office said Moody's report generally appeared to be accurate.

The report concludes that increased state revenues may be required to meet the state's transportation needs and spur economic development. It also concludes that cutting tax credits and economic development incentives would put the state's future economy at risk.

Those are important points for St. Louis area officials, who are lobbying for a transportation tax package and for state help with a downtown development project centered on a new St. Louis Cardinals baseball stadium.

The report "is clearly an affirmation" of that legislative agenda, said Thomas Irwin, senior vice president of public policy for the St. Louis RCGA.