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ANALYSIS: Nixon's spending, budget cuts are nearly balanced

Monday, June 29, 2009 | 12:01 a.m. CDT

JEFFERSON CITY — Gov. Jay Nixon has touted almost as much new state spending as he has axed in order to balance Missouri's budget.

Last week, the Democratic governor vetoed $105 million from the 2010 budget taking effect Wednesday. Calling the cuts a "near record," Nixon said they were needed to preserve state support for health care, education and economic development.

But the money-saving vetoes were nearly offset by the $95 million cost of Nixon's marquee new programs.

Public universities and community colleges will get $40 million to expand health education programs under an initiative backed by Nixon. And an economic development bill that Nixon has called "my jobs bill" increases business tax breaks by about $55 million.

A final, official cost estimate for the economic development legislation has not been prepared. But it expands three existing tax credit programs by a total of $40 million and exempts businesses from paying nearly $15 million in corporate franchise taxes on their assets.

Speaking to reporters about the vetoes, Nixon explained that the health care education and economic development programs were designed to spur job creation in the state and ultimately boost revenue.

Missouri revenues are expected to fall 6.7 percent in the fiscal year ending Tuesday because of decreasing personal income and sales tax collections. Nixon's budget office expects revenue to drop again next year.

So to balance the budget while adding new spending, Nixon made cuts across state government. In addition to the $105 million in line-item vetoes, he put on hold $325 million of budgeted expenditures.

Among the vetoes in a $23 billion operating budget that was approved by the Legislature are:

  • $2 million from an existing Internet network for colleges and K-12 schools.
  • $500,000 for Area Health Education Centers in rural and underserved areas.
  • $141,910 for meat and poultry inspectors.
  • $3.6 million for dental reimbursement rates through the state Medicaid program.

Nixon also cut into a construction and capital improvement bill that called for spending $600 million over two years. Nine college construction projects, a highway interchange in Jefferson City and radio towers and a parking lot for the Highway Patrol were among $82 million worth of the projects to be zapped.

The budgetary decisions harkened to Nixon's response to questions during the 2008 gubernatorial campaign about paying for campaign promises: Budgets are about priorities.

Nixon decided it was more important to spend additional money on health care and business incentives than on such things as $100,000 worth of vehicles for the Department of Corrections.

The governor called exempting more businesses from the corporate franchise tax a "targeted tax cut" designed to tell small businesses that they are important and state government is counting on them to help turn around the economy.

"We wanted to send a signal that we are going to value the entrepreneurial spirit of people in this state," Nixon said. "There's a lot of people taking a lot of risks to start tire sales places or beauty salons or accounting firms or whatever all across this state."

Jack Cardetti, a spokesman for Nixon, said the budget cuts were required because state revenues didn't meet projections and not because of new programs. Cardetti said that even if the Legislature had not supported the governor's proposals, lawmakers would have spent the funds elsewhere in the budget.

In the immediate aftermath of the vetoes, no one has disputed that state spending needed to be cut. Instead, critics wrestled over what should have been cut — and not everyone agreed with the priorities shown in Nixon's budget.

University of Missouri System President Gary Forsee criticized decisions to veto funding for several construction projects and to freeze money from flowing to others, such as the Ellis Fischel Cancer Center at the University of Missouri-Columbia and two buildings at the University of Missouri-St. Louis.

"We fully understand the state is facing challenging financial times, but eliminating or delaying funding for shovel-ready projects represents a missed opportunity to stimulate the economy by providing jobs and better education and health care services for Missourians," said Forsee, who leads the four-campus university system.

 


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