Budget challenge to force crucial decisions

When Gov. Bob Holden gives his State of the State message to the Missouri Legislature this morning, don't be surprised to hear a call for tax increases to pay for state spending plans that could be as much as $1 billion more than anticipated revenue in the fiscal year that starts July 1.

And don't be surprised to hear the governor repeating his request to Congress for the federal government to pick up more of the burden on state government imposed by mandated programs.

How Missouri -- and many other states as well -- got to this financial predicament has been explained over and over. When the economy was good and state revenue was growing, legislators and the governor found ways to spend it all. By the time the economy slumped a couple of years ago, the state was faced with maintaining costly programs.

Neither cutting back on those programs nor increasing taxes to pay for them are politically popular. But it may be expressly for political purposes that the governor pushes for tax increases rather than spending cuts in his message today.

For the first time in more than half a century, both houses of the legislature are controlled by Republicans. A call by Democrat Holden to maintain what he will call vital and essential programs will, he hopes, place the political onus on the Republican legislative majority to come up with the funding -- or take the political heat when more programs receive reduced funding or are cut altogether.

Missouri's $18.9 billion budget for the current fiscal year, which started last July 1, already is more than $700 million short. Holden has made $67 million in cuts, and the state has used $436 million of one-time funding sources, such as selling bonds to be repaid by future receipts the state hopes to get from the national tobacco settlement. The governor anticipates another $300 million shortfall through the remaining 5 1/2 months of the fiscal year, meaning further reliance on one-time funding.

So what will the legislature and governor finally agree on?

Across-the-board budget cuts of the full $1 billion in anticipated revenue shortfall would have a drastic impact on the delivery of state services, the governor and his budget advisers maintain. The state's budget director, Linda Luebbering, laid out a grim scenario last week: freeing prison inmates, laying off more than 5,000 of the state's 65,000 employees and cutting school funding, which has been staunchly protected by Holden at the expense of other state programs -- higher education in particular.

Beyond that, Holden must, in his budget plan, take into account federal requirements for the state to pay its share of the State Children's Health Insurance Program, homeland security, the No Child Left Behind education initiative and federal highways.

Legislators face a daunting task, but it is not one that requires additional taxes for the full $1 billion shortfall predicted by the governor. At nearly $19 billion, state spending is excessively burdened by questionable programs and operations that could be performed more cost-effectively.

A stunning achievement would be a budget process that funds only those programs that are necessary and effective -- and have a high level of accountability for achieving their intended goals.