UPDATE: Politicians debate over use of state’s largest surplus in two decades

Tuesday, July 15, 2008 | 10:10 p.m. CDT; updated 2:19 p.m. CDT, Tuesday, July 22, 2008

JEFFERSON CITY — Although the economy remains shaky, Missouri is beginning its new budget year with its largest surplus in at least two decades.

The surplus is due largely to savings that have built up over recent years, as tax revenues came in higher than expected and state agencies spent less than anticipated.

By the numbers

Missouri ended its 2008 fiscal year on June 30 with its largest cash operating balance. Here is a look at previous year-end balances by fiscal year, listed in millions of dollars. Figures come from the state Office of Administration. YEAR BALANCE 2008: $833.4 2007: $753.0 2006: $695.3 2005: $300.3 2004: $488.6 2003: $216.3 2002: $165.1 2001: $109.2 2000: $169.8 1999: $356.8 1998: $348.4 1997: $277.6 1996: $463.8 1995: $473.0 1994: $274.6 1993: $226.1 1992: $59.5 1991: $39.9 1990: $57.0 1989: $110.3 1988: $94.3

Missouri began its 2009 fiscal year July 1 with an operating fund balance of $833 million — the largest amount on record dating back to 1988, according to figures provided Tuesday by the state Office of Administration.

That’s on top of $557 million Missouri has set aside in its constitutionally required budget reserve fund.

The sum of the equation is that Missouri should be well-positioned to weather an economic crisis, should one occur in coming months, the state’s Republican administration and legislative leaders said.

A survey of the National Association of State Budget Officers released last month listed Missouri as one of 15 states projecting higher revenues than originally anticipated in 2008.

“While other states are struggling with budgets that cannot keep pace with spending, our responsible budgeting decisions and solid financial planning are ensuring that Missouri is on solid financial ground,” Gov. Matt Blunt said in a written statement.

Republican legislative budget leaders used phrases such as “fiscal restraint” and “prudent budgeting” to describe Missouri’s surplus.

But ranking Democrats on the legislative budget committees said that by stockpiling money, Missouri is failing in its obligation to provide health care coverage and the best possible educational opportunities to its residents.

“When you deny services just to hold back money, I don’t think that’s good stewardship of the taxpayer dollars,” said Sen. Joan Bray, of St. Louis, the top Democrat on the Senate Appropriations Committee.

When Blunt took office in January 2005 along with a Republican-led House and Senate, they enacted various cost-cutting measures that they said were necessary to balance the budget.

That came after several prior rounds of budget cuts during the early 2000s, when control of the Missouri Capitol was split between Democrats and Republicans. Those earlier cuts hit higher education especially hard.

The most contentious of Blunt’s cuts occurred in the Medicaid health care program for the poor. Coverage was eliminated entirely for tens of thousands of adults, and benefits were reduced for hundreds of thousands of others.

Although some services have been restored, the majority of those cuts remain in place and figure to be a key battle point between Democrats and Republicans in November’s elections.

“A large part of the ($833 million) balance is because we refuse to spend money on health care and education,” said Rep. Margaret Donnelly, of St. Louis, the ranking minority member on the House Budget Committee and one of several Democratic candidates for attorney general.

Lawmakers are planning to tap into some of the surplus this year. The 2009 budget includes a larger percentage increase in spending than in projected revenues.

As a result, Blunt’s Office of Administration estimates the revenue surplus will be whittled down to around $487 million when the current fiscal year ends June 30, 2009.

Gary Nodler, chairman of the Senate Appropriations Committee, said it makes sense to spend some of the surplus on one-time projects, such as building construction and maintenance and computer equipment and software.

“I just hope people don’t get giddy over that balance,” said Nodler, R-Joplin.

Allen Icet, chairman of the House Budget Committee, said lawmakers have learned from the past. When the economy was going strong in the mid-to-late 1990s, the Legislature used expected surpluses to expand state programs and grant widespread tax cuts.

With the nation now facing an uncertain economy, it’s no time to view the state’s surplus as a spending resource, he said.

“I don’t understand why anyone would want to put our state’s economic health at risk, given the times we live in,” said Icet, R-Wildwood. “I’d rather be safe than sorry.”

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