AMENDMENT ESTABLISHES WISE BUDGET DIRECTION

(In conversation with Jon K. Rust, editor of Perspective)

Just as it is wise to save for emergencies in our personal financing, it would be wise for the state to put aside some "rainy day money" for the times it needs more dollars to meet its obligations. This is the goal of Constitutional Amendment #6, which represents a common sense approach to improving the state budgeting process. Actually, the idea behind this amendment is nothing new to Missouri. In 1985, the state legislature established just such a fund. However, no state moneys were appropriated to this fund until 1992.

What this amendment would do is codify the "rainy day fund" at a higher legal level. It does not force compliance, and thus remains mainly an encouragement (at least at the beginning), but it does set a clear direction in accountability of state monies. In these fluctuating economic times with state financing affected by global industries and competitive markets, a fund which could be a stabilizer would be helpful.

Relieving the pain

The practical benefits of this amendment are many. Most importantly, though, is the potential it has to relieve some of the pain we all feel when the Governor is forced to withhold monies already appropriated because state revenues fall below what was anticipated.

It has become a matter of routine that the Governor will withhold three percent from appropriated money before it is allotted, to insure that the state maintains a balanced budget. Sometimes, to adhere to balanced budget requirements, he is forced to withhold more.

What a "rainy day fund" does is shift the withholding burden from the end of the process (thus denying some entities money that they had budgeted for) to the beginning. Then, if state revenues fall short of projections, it will be up to the governor and legislature to determine if money shall be withheld from appropriations, or if money appropriated but not available should come out of this "rainy day fund."

The legislature is not forced to tap into this fund, and, in fact, can not without a four-sevenths vote. But it will be there, available, in the event of a revenue shortfall.

Amendment not a panacea

Unfortunately, this amendment does not have the teeth that I would have hoped for, because there is no mechanism to put the money into the fund at the beginning. If you have read the amendment, you will have noticed that the operative phrase is: "In any budget submitted to the general assembly, the general assembly MAY AUTHORIZE (emphasis mine) an appropriation from general revenue to the budget stabilization fund...."

Later, in another section, it says: "NOTHING in this subsection shall be construed to REQUIRE (emphasis mine, again) the general assembly to appropriate money to the budget stabilization fund in order to initially reach the three percent level specified herein...."

The fact is that until the fund reaches a certain level, three percent of collections (which is around $136 million today), it is up to the general assembly and the governor to decide whether or not to put money into the fund. There is no mandate for them to do this.

Does this mean we should reject this amendment, then? I think not.

Growing teeth

An important precedent has been set. This year, Governor Ashcroft put $17 million into the already-existing state fund. This money would form the foundation of the constitutionally-established fund, in the event this amendment were to pass. While this $17 million is still a far way from the three percent necessary for certain rules concerning maintenance of the "rainy day fund" to kick in, it has helped establish a move in that direction. If this direction is maintained by the next governor and the three percent level is reached, the amendment mandates a continuation of the fund at no less than a three-percent level and no greater than a five-percent level. In short, the amendment, while lacking an enforcing mechanism in the early stages, would grow the necessary teeth for it to be truly meaningful and good for this state.

We need a whole lot more for this amendment's goals to be fully in force, but we've got to make this step at least. That is why I encourage you to support Amendment #6 when you vote in November.