OVERSPENDING PRODUCED TIGHT STATE FINANCES

State government finances under Gov. Bob Holden continue to raise eyebrows and red flags. In this regard, it is worth noting that Holden was state treasurer, signing the checks, for the eight years preceding his ascension to the position of chief executive. Nearly all his career has been spent in and around the state or federal government.

A careful review of those finances shows that Missouri has been on a spending binge. This year alone, when we are constantly being told that state finances are especially tight, the state budget grew from something over $16 billion to nearly $19 billion.

What is becoming increasingly apparent is that state government went on an incredible spending binge under Gov. Mel Carnahan, and we will be a long time digging out of the hole.

Economic downturns of the kind we have seen these last 15 months or so occur with predictable regularity. It is the job of prudent state budgeteers to anticipate them and plan accordingly

What we find, instead, is that state government has started this fiscal year, which began July 1, with the lowest bank balances since the early 1990s. That was a time of brief recession. This July 1, the state had $439 million on hand, the lowest in a decade. By comparison, the state started each of the last four fiscal years with a cushion on hand of between 15 percent and 20 percent of the money it expected to spend that year.

Receipts from personal income taxes continue to rise, reflecting fairly strong employment in the state. However, receipts from sales taxes and corporate income and franchise taxes have lagged, reflecting the slowdown that has steepened over the last year.

It seems clear that spending restraint is what is needed, and to that end, Governor Holden has commendably vetoed $36 million and asked state agencies and departments to cut another $200 million. This is painful but, as to most of it, necessary.

Missourians will continue to ask, however, how it is that the state got into such a fiscal mess at a time when revenue continued to rise sharply. And that is a good question to put to the man who has spent his entire life wanting to be governor.