TREASURER URGES INVOLVEMENT IN BUDGET

Missouri Treasurer Bob Holden told area Rotary Club members Thursday that "profound changes are coming" from Washington, D.C. that will have a major impact on funding decisions of state and local governments.

Holden urged the Rotarians to become familiar with the impact of efforts to balance the federal budget so they can play a role in the decision process.

Holden said he believes a balanced-budget amendment will pass Congress and be sent to the states for ratification. However, he said the debate needs to be viewed "carefully and cautiously."

"We need to be careful they do not try to balance the budget on our backs and pass along programs that we either have to fund or eliminate," said Holden.

Besides state and local governments having to make decisions on what programs to keep or fund, Holden said state matches for federally funded projects will likely increase. Instead of paying 10-15 percent for highway and bridge projects, states probably will pay a larger share.

"We will have an opportunity to reshape priorities on how we spend money at the federal, state and local levels," said Holden. In making decisions about priorities, the treasurer said it will be important to get input from citizens.

Holden said he will be working with the Missouri Association of Counties and city governments to help them establish a criteria for making decisions on where to invest funds.

He said the financial crisis caused by bad investments in Orange County has drawn attention to the problem. But Holden said two years ago Maryville had a problem with its investments, and recently Joplin and Fulton have had problems.

"In all of those cases, one single individual was responsible for making the decisions on those investments," said Holden. "We are not going to be telling people how to make their investments, but we want to help them to wisely invest those dollars and manage those funds."

Holden said standard rules of investments are to put safety of funds first, liquidity second, and the interest yield third. But because of the shortage of revenue local governments face, many are placing too much emphasis on yield and not enough on safety.

Over the last eight years, the state budget has doubled, and Holden said the trend may continue. Unfunded mandates from the federal government have helped drive up the state budget, and now efforts to balance the federal budget may make it difficult to curtail state budget growth.

Holden said he believes legislators will pass a tax-limitation amendment this session.

"I think people have sent a clear message," said Holden. "The people want us to do a more effective job with the money we have, without more tax increases."

While in Cape Girardeau, Holden made several stops, including a tour of Magnetic Collectibles which has benefited from the state's linked-deposit loan program from small businesses.