HOLDEN LEAVES HOLES IN HIS SPENDING PLAN

When Missouri Gov. Bob Holden announced his state spending plan during his State of the State Address Tuesday, a lot of eyebrows arched.

In its simplest terms, the state budget for the year beginning July 1, if approved, would increase total state spending to $19 billion, a whopping $2 billion increase from the current budget of nearly $17 billion. Looking at those figures, it's easy to calculate that total state spending in one year is poised to increase 11.8 percent -- far above any other growth patterns such as personal income, cost-of-living index and so forth.

$1.2 billion in pass-through funds

Dissecting Holden's budget plan, however, produces extenuating circumstances. For example, the $19 billion total includes some $500 million from highway bonds approved at the end of last year's legislative session, plus as much as $300 million in tobacco-settlement revenue. In total, the Holden budget includes $1.2 billion in additional pass-through funding.

The actual increase in proposed spending that would be funded by the state's taxpayers is somewhere in the neighborhood of 4 percent, the bulk of which is an anticipated 3.6 percent increase in general revenue.

Even with these footnotes and explanations, the Holden budget is a tax-and-spend plan. In his address, Holden stated: "The first priority of this legislative session must be to tighten our belts and deliver a balanced budget." That statement borders on smoke and mirrors.

Missouri is constitutionally required to balance its budget. But a balanced budget that increases the burden on state taxpayers by more than 4 percent is not a good example of belt-tightening, which usually refers to less spending -- often forced by less revenue. Instead, the Holden budget anticipates state revenue will increase generously, and it further anticipates spending every dime.

Shortfalls in revenue to pay for the current state budget and skyrocketing costs of federal mandates already are squeezing Missouri's purse strings. To advocate spending increases at the pace recommended by Holden borders on fiscal recklessness.

Apart from budget matters, Holden's address highlighted two other areas of concern.

There is the matter of the tobacco-settlement funds. The governor is keen to have some $225 million of that money -- along with nearly $90 million in additional federal matching funds -- spent on his priorities of prescription drugs for the elderly, health-care access for all Missourians, anti-smoking programs, life-sciences research and early childhood care. To accomplish that goal, Holden announced he would issue an executive order to establish a trust fund into which all the tobacco money will flow.

On the one hand, Holden is right to seek accountability for how the tobacco money is spent, which the trust fund would do. But he also wants to say what programs the tobacco money will fund -- something the legislature hasn't been able to agree on during two years of debate. Fortunately, the legislature must appropriate the tobacco money before it is spent.

Promise of leadership, but no details

But perhaps the most troubling point in Holden's address had to do with the state's transportation needs. He said grappling with this issue had been put off too long "because no one was willing to take the lead on a solution. I am prepared to take that lead." How disappointing it was, then, that the governor offered not one shred of detail about what he intends to do. Does he favor state Sen. Jim Mathewson's $650 million proposal that would increase taxes? Holden won't say. Does he favor another plan for toll roads? Holden won't say. Does he have a plan of his own to put before the people? Holden won't say.

Holden is entitled to a few weeks of new-governor jitters, but he will need to come to grips soon with runaway spending, working with the legislature on spending the tobacco money and the overwhelming task of addressing transportation needs.