Nixon to cut next year's budget by additional $350 million

Tuesday, May 18, 2010 | 5:16 p.m. CDT; updated 10:10 a.m. CDT, Wednesday, May 19, 2010

COLUMBIA — Nearly half a billion in cuts was not enough.

In March, Gov. Jay Nixon called on legislators to trim next year's budget by $500 million. When the budget passed April 29, the House Budget Chairman Allen Icet, R-Wildwood, said they made it most of the way, reducing it by $484 million.

But on Tuesday, the state's budget director indicated in a statement that Nixon would soon be announcing roughly $350 million in additional cuts to the budget for the next fiscal year, which begins in July.

Linda Luebbering said the tuition-freeze deal reached by Nixon and Missouri college presidents in November is likely to remain intact unless the state's economic picture becomes a lot worse.

"It's definitely one of the highest priorities," Luebbering said.

Under the terms of the deal, Missouri's public colleges and universities agreed not to raise in-state undergraduate tuition next year in exchange for preserving 95 percent of their funding for next year.

She said there is no single place the cuts will come from and that finding the savings will be difficult.

"We're looking everywhere in the budget," she said.

Nixon released his initial budget recommendation for the 2011 fiscal year in late January when he gave his State of the State address. By early March, Nixon said his recommendation would likely need to be cut by an additional $500 million to account for continued declines in state tax revenue and the uncertainty of additional federal funds included in his recommendation.

When the budget passed in late April, Nixon praised the bipartisan effort between his administration and the General Assembly that led to passage of a "fiscally responsible budget."

But the budget was banking on the passage of several cost-cutting pieces of legislation, many of which didn't pass. The proposed budget called for the elimination of three state holidays, and only one was eliminated. Changes to the state retirement system didn't pass either, and of several proposed departmental reorganizations, only the transfer of the State Water Patrol into the State Highway Patrol occurred. 

Some of the measures did pass, including reductions for some Medicaid reimbursements. But the budget was relying on $125 million in savings from all of the pending bills, and the few that passed generated only $36 million in savings.

Luebbering said that the budget had allotted federal funds for expenses that were not eligible for federal money, and it made unrealistic projections about Medicaid caseload growth.

"It could very well happen," she said when referring to the Medicaid caseload estimates, "but we can't count on it at this time."

Nixon is planning to unveil the additional cuts when he signs the budget in early June, Luebbering said. Nixon signed the budget in late June last year, but she said he is hoping to sign it earlier this year to give state departments more time to adjust.

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