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House approves less than half the governor's bond issue request

February 12, 2003
By: Jason McLure
State Capital Bureau

JEFFERSON CITY - House Republicans voted to limit how much Gov. Bob Holden can borrow in the next four and a half months, even as the governor warned their action would force him to make deep cuts in funding for Missouri's schools and colleges.

In a party line vote, Republicans gave preliminary approval for the governor to borrow $100 million this year, less than half what he requested.

House Budget Committee Chairman Carl Bearden, R-St. Charles, said the remaining deficit should be closed with cuts from elsewhere in the state budget, not education. He said Republicans have already compromised by allowing the governor to spend $100 million of a loan secured by nearly 40 years of future tobacco settlement revenues.

"We're all going to hold our nose if this goes through," Bearden said of his party's plan.

But Rep. Chuck Graham, D-Columbia, said the Republican proposals weren't realistic.

"We could lay off every state employee right now and still not close the budget shortfall for 2003," Graham said. "One hundred million is not going to get us where we need to be."

As spectacular as Graham's claim seems to be, State Budget Director Linda Luebbering confirmed that if Missouri were to stop paying every single employee from now until the end of the fiscal year on June 30, the money saved would be approximately equal to the state's $350 million shortfall.

"We're talking about a serious, serious budget problem," Luebbering said.

On the floor of the House, both sides accused the other of playing politics rather than negotiating in good faith.

Graham said Republicans were being self-serving by giving the governor just $100 million of the $373 million to be raised by a tobacco bond issue and stashing the rest for next year's budget. This would force the governor to have to make steep cuts in the remainder of this year's budget, cuts he alone can make since the legislature approved this budget last June.

The Republican-controlled legislature would then have the benefit of the remaining $273 million to use as they draw up next year's budget, which is projected to be $1 billion in the red.

As Republican leaders and the governor continue to negotiate behind closed doors, the following is a summary of the budget process's current status:

Through December, the state is running a $350 million shortfall. The Missouri Constitution says that must be balanced by July 1.

Republicans and Democrats have agreed on how to fill $187 million of that by:

borrowing $100 million in revenue against future tobacco settlement revenue;

cutting $27.7 million expense, equipment, and staff

spending $10 million of the state's cash in hand used to pay bills and unexpected expenses

pushing $50 million owed to Southwestern Bell as a result of a legal settlement into next year's budget

Total: $187.7 million

In dispute: $162.3 million

What Gov. Holden says: The remaining $162.3 million should come by borrowing against future tobacco revenue.

If the legislature doesn't authorize that, the governor has said he'll cut $41 million from higher education and $121 million from elementary and secondary education. This would mean about $9 million from MU and $2.8 million from Columbia Public Schools.

What the Republicans say: Remaining tobacco money should be used to cover part of next year's billion dollar shortfall. Instead, the governor should:

cut $30.5 million for a new UMKC pharmacy building

spend $50.6 million from the governor's emergency reserve

spend $23.9 million more of the state's cash on hand

count $57.3 million in cuts to expense, equipment, and staff the governor has promised to make in anticipation of the deficit growing.

The governor and legislative Republicans may also be forced to find additional cuts or revenue, as both agree that the projected shortfall of $350 million underestimates what the deficit will be by the end of the year.

Rep. Russ Carnahan, D-St. Louis, said whether the legislature authorizes the governor to spend more tobacco money this year or not, members of both parties should continue to examine ways to reduce spending.

"I don't think anybody on this budget is going to stop looking for cuts," Carnahan said.