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Even a mild recession in the next two years could create a major revenue shortfall for state government in Missouri. So says a national study by a nonpartisan group in Washington, D.C. The study on how states would fare in a recession no worse than the one in the early 1990s was undertaken by the Center on Budget and Policy Priorities, a not-for-profit research and policy institute that regularly conducts studies on national and statewide tax and revenue issues.

The center's study assumes a three-year recession during fiscal years 2001 through 2003. Over that period, the estimate is that Missouri would experience a revenue shortfall of at least $1.28 billion, representing 18.6 percent of fiscal 1999's budget outlays. These projections rank Missouri 35th in the nation in the differential between reserve funds and the maintenance of existing programs and services during an economic downturn. The study projects Missouri could require as much as $1.47 billion in additional revenue in a three-year recession no more severe than the one experienced earlier this decade. To balance it, the state is projected to have only $202 million in its two reserve accounts by the end of its current fiscal year June 30.

Those with memories of the much more severe recession of 1980-82 will recall what this can mean. Back then, it meant painful cuts across all parts of state government. It meant, for years at a time, no capital improvement bills of the kind that have been an annual fact in recent years, leading to construction of Southeast Missouri State University's Dempster Hall, the funding of the River Campus and many other improvements across the state.

Missouri is among 16 states that would need to build additional revenue of between 10 and 20 percent of fiscal 1999's spending in order to avoid tax increases or spending cuts during the next recession.

Sen. Larry Rohrbach, R-California, passed a proposed constitutional amendment that now goes to a public vote. It would combine the Cash Operating Reserve Fund with the Budget Stabilization Fund in a new Budget Reserve Fund within the state treasury. It is to be hoped that voters will approve this measure and move the state toward more preparedness in the face of the next economic downturn.