Missouri's budget hole deepens

Wednesday, March 3, 2010 | 12:01 a.m. CST; updated 12:23 p.m. CST, Wednesday, March 3, 2010

*CORRECTION: Chris Kelly, D-Columbia, did not meet with the governor. A previous version of this article incorrectly reported this information.

JEFFERSON CITY – More cuts are coming.

Gov. Jay Nixon began meeting with legislative leaders Tuesday to discuss cutting nearly half a billion dollars from next year's budget, the same day his office announced a third straight month of double-digit declines in Missouri's revenue that will likely result in additional cuts in the current year.

House Budget Committee Chairman Allen Icet, R-Wildwood emerged from a meeting with the governor*, saying that $400 million to $500 million would have to be cut from the governor's spending plans for the 2011 fiscal year.

A cut of that magnitude would be similar to the entire state funding for the University of Missouri System.

Icet predicted that the size of the cuts are such that it will "change the nature of state government."

Late Tuesday afternoon, Nixon's budget director announced that revenue declined nearly 15 percent in February compared to last year. This followed January numbers that came in more than 20 percent below the previous year. To date, total revenue for the fiscal year, which begins in July, is more than 13 percent off  last year's mark.

In addition, $300 million of federal funds that Nixon included in next year's budget came into jeopardy last week when a U.S. Senate jobs bill did not include that funding. A previous jobs bill in the U.S. House of Representatives did include that money.

If the funds are approved, they would expire at the end of the 2011 fiscal year. But Budget Director Linda Luebbering said her office would consider replacing state money with the federal funds. They would put the $300 million in state money aside for the next year, when nearly a billion dollars in federal stabilization funds expires.

Luebbering said in January that another month of revenue decline would likely force Nixon and legislators to consider revising their Consensus Revenue Estimate, a projection of the state's income next year on which the budget is based.

Nixon announced Monday that he would begin meetings with legislators to revise this number.

"We will need to downsize the scope of state government, while protecting necessary services to the citizens of Missouri," Nixon said in a statement.

Icet and Senate Appropriations Chair Rob Mayer, R-Dexter, are responsible for making the final decision for their respective legislative chambers.

Mayer said Monday that he would like some time to look into Missouri's financial outlook before making a decision on whether to revise budget numbers for next year.

"It's just not something we jump into in a matter of a day or two and say we're going to eliminate this program or cut this program a certain amount," he said.

But Mayer acknowledged that the timetable for crafting the budget, which needs to be completed by the end of the session, could make more analysis difficult.

Icet has said previously that Nixon should introduce a new budget for next year, if the revenue estimate changes. On Monday, he said he might be willing to compromise, but that Nixon would have to be involved in the process.

In January, Nixon released his budget recommendations for next year. Now, the House and Senate tweak and pass a final version. But drastic revenue changes mean the legislature must make more cuts than usual.

"If the governor expects the House Republicans to do the heavy lifting all by themselves, the probability of that happening is not very high," he said.

A letter released late Monday night by Icet and other House Republican leaders called on Nixon to provide specific recommendations as to where cuts should occur.

"We have received no details from you or your directors with respect to the necessary cuts you are suggesting to fix the budget," the letter said.

After meetings with the governor on Tuesday, Senate Republicans said they didn't come away with many specifics.

"There were no concrete plans that came out of (the caucus) as to what we're going to do," said President Pro Tem Charlie Shields, R-St. Joseph.

Sen. Kurt Schaefer, R-Columbia, said Nixon is looking for areas of government to consolidate to meet budget projections.

He said Nixon mentioned possibly consolidating all state lab work in one agency and removing state holidays.

Schaefer, vice-chairman of the Senate Appropriations Committee, said small cuts such as these would only cut $10 million, and not be enough to address the budget issues.

"If this is the first step — dialogue — I think that's good," Schaefer said. "I certainly hope, though, that the governor doesn't think that coming and speaking to us and pointing out what we already know and then not offering solutions is going to be the end of it."

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