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NEWS ANALYSIS: Missouri budget cuts at stake in court case

Sunday, October 30, 2011 | 5:32 p.m. CDT; updated 9:03 p.m. CDT, Sunday, October 30, 2011

JEFFERSON CITY — Beneath the political overtones of a court battle between Missouri's Republican auditor and Democratic governor, an important constitutional question could soon be decided in a courtroom: Can the governor cut the state budget regardless of whether revenues are running short?

If the answer is yes, Missouri governors might well be able to disregard the will of the General Assembly and reduce spending for programs that fall out of their favor or for offices controlled by their political foes.

If the answer is no, Missouri governors might well be left powerless to keep the budget in balance when disasters strike or expenses unexpectedly rise.

A Cole County judge is to hear arguments Monday in the case, though an instant decision is unlikely. Either way, the case may eventually make it to the Missouri Supreme Court.

At issue is Gov. Jay Nixon's announcement in June of about $170 million of spending reductions — including $57 million from the general revenue fund — from the budget that began July 1. The governor cited his constitutional authority to make such cuts. But a lawsuit by Auditor Tom Schweich claims Nixon went beyond what the constitution allows.

The argument centers on a section of the Missouri Constitution that states: "The governor may control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means, and may reduce the expenditures of the state or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based."

Schweich contends that means the governor can only cut the budget when revenues fall below projections.

Nixon contends the comma in constitutional provision means he has two distinct powers. The second half of the sentence gives him authority to make cuts when revenues fall. The first half gives him power to make cuts — characterized as controlling the rate of expenses — even when the economy is good.

Schweich thinks Nixon's interpretation is a dangerous expansion of gubernatorial powers.

"He has rendered the legislature an advisory board with his position because he can rewrite the budget for basically any reason with no accounting restraints and no legal constraints," Schweich said.

In a court document filed on behalf of Nixon, Attorney General Chris Koster's office countered that Schweich's interpretation would damage the governor's duty to balance the budget and "completely perverts the meaning" of his constitutional powers.

There is no dispute that the constitution allows governors to make budget cuts when revenues fall short of projections upon which the budget was based. But that's not what's at issue in the current case. The court documents filed on behalf of Nixon say the cuts announced in June were authorized under his separate power to control the rate of expenses, without regard to the status of state revenues. That's an important distinction, because Missouri's revenues for the current fiscal year are generally on track with projections.

So that raises the question: Is Nixon stretching the power to "control the rate" of expenses further then intended?

At the very least, he may be stretching it further than it has traditionally been used.

The Associated Press interviewed many of Missouri's still-living previous budget directors, whose terms covered the state's five most recent governors, both Democrats and Republicans. Those former budget directors said the power to control the rate of expenditures has usually been employed for more traditional cash-flow purposes — for example, to give agencies smaller allotments of money early in the fiscal year and larger amounts later in the year to match the cycle of state income tax collections.

In the early 2000s, when the state budget was under duress, that constitutional provision allowed Missouri to change the way it paid universities — giving them 12 equal payments instead of one lump sum earlier in the budget year and another lump-sum payment near the end, said former budget director Brian Long.

Some budget experts suggest that the governor's authority to control the rate of expenditures implies that state programs eventually will get the full amount they were due to receive, just not in their typical increments. By that logic, the provision about controlling the rate of expenditures could not be used to reduce expenses.

Nixon justified the current spending cuts partly on the need to meet the unexpected — and still untallied — costs of responding to and recovering from the devastating Joplin tornado and major flooding. His budget director, Linda Luebbering, has described the governor's actions as "expenditure restrictions" — reductions that theoretically could be reversed before the fiscal year ends June 30. But she said this past week that there are no immediate plans to do so.

Luebbering suggested the two gubernatorial powers — to control the rate of spending, and to reduce spending — are intertwined. What currently could be viewed as a move to control the rate of expenditures could become a full-fledged reduction in expenditures by the end of the fiscal year.

"The restrictions really are part of both worlds — they help us from a cash management standpoint, and they help us if we need to do permanent restrictions to keep the budget in balance," Luebbering said.

David A. Lieb has covered government and politics for The Associated Press since 1995. He can be reached at http://twitter.com/DavidALieb.


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