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Airline Layoffs Could Threaten State Budget

September 20, 2001
By: Nicholas Rummell
State Capital Bureau

JEFFERSON CITY - The state of Missouri may face serious economic backlash from Wednesday's announcement by American Airlines officials of national layoffs of at least 20,000 workers, according to Missouri government officials.

It is unclear if St. Louis -- where American-owned airline TWS and where 13,000 of American's total 138,350 employees work -- will be specified as an area where such cuts may occur, but it comes on the heels of a recent budget crisis for Missouri.

"Any significant curtailment of the [airline industry's] operations would be devastating to our state and to our region," said Gov. Bob Holden.

Holden spent all day Thursday in Kansas City and St. Louis encouraging people to continue their travel plans and utilize air travel following the announcement.

"The governor is guardedly optimistic," said the governor's spokesman, Jerry Nachtigal. "But we hope this will not push Missouri into a recession."

Brian Long, the administration's budget director, said that Missouri would find a way to balance the budget. However, Long also said that unemployment from the proposed layoffs in Missouri might put an unanticipated draw on state social services.

Long said that budget withholdings made before the special session of the legislature have already stretched social services thin, and general revenues in Missouri have been reported as down for the last fiscal year.

The prescription drug bill, which was one of the three victories for the governor during the special session, could face funding problems because of the increased stress on the budget, said the bill's sponsor and chairman of the Senate Health Committee.

"We will need to paint with a smaller paintbrush," said Sen. Marvin Singleton. "It will be a good lesson in responsibility."

According to the Labor and Industrial Relations Department, employees laid off by the airlines could be on unemployment benefits for up to 26 months.

Department Director Catherine Leapheart said that Missouri would make such layoffs "as painless as possible" and said that "there is no doubt that those employees will get every unemployment check."

Boeing, an airline company that manufactures military and commercial jets, also announced 30,000 layoffs, although airline officials have said they do not expect any layoffs in the St. Louis area.