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Missouri's budget picture among the worst in the country for 2003-2004

March 05, 2003
By: Jason McLure
State Capital Bureau

JEFFERSON CITY - Missouri's current budget woes may cause it to cut health care coverage for 80,000 poor children, keep 1,600 inmates in a crumbling and outdated prison, and slash classes offered at the state's universities.

But Missourians should consider themselves lucky compared with Alaskans or Californians. Those states face budget holes proportionately twice as large as Missouri.

A report from the National Governor's Association reveals that states across the country are facing budget shortfalls of $80 billion for next year. Gov. Bob Holden's office has estimated Missouri's projected deficit to be $1 billion for the fiscal year beginning July 1.

Since nearly all states are required to balance their budgets, lawmakers across the country are being forced to make politically wrenching decisions: either raise taxes, cut popular services like education and health care, or borrow money through carefully structured proposals that circumvent balanced budget laws.

As a percentage of the states' general revenue funds, Missouri's 2003-2004 deficit is the tenth largest in the nation, according to a report from the National Conference of State Legislators. Missouri's shortfall is projected to be 15 percent of its general fund.

This winter, Gov. Holden, a Democrat, and the Republican controlled legislature agreed to borrow $185 million for next year to help close the shortfall. For the remainder, the governor has proposed raising taxes on gambling, cigarettes, corporations and personal income. Holden is not alone in asking for tax increases. Governors in fourteen other states have issued the same demand. But in Missouri, legislative Republicans have vowed not to increase taxes and are focused on cutting services such as Medicaid.

Lawmakers elsewhere have come up with alternative methods to address their fiscal crises.

* In Kentucky, Gov. Paul Patton ordered the release of nearly 900 inmates this winter as a way to save money. Though the governor was criticized after several were rearrested just days afterwards, he has threatened to open the prison gates again unless the legislature addresses the state's budget problems.

Releasing prisoners is something lawmakers in South Carolina are considering as well after that state's Corrections Department suggested it release 4,000 in an effort to cut costs. In Missouri, Gov. Holden has vowed not to grant inmates early releases. But House Budget Committee Chairman Carl Bearden, R-St. Charles, said the Corrections Department has been releasing certain prisoners as much as six months early since September as part of an effort to cut costs.

* In Illinois, the state government faces a shortfall estimated to be $4 billion. Rather than close all of that by raising taxes or cutting spending, Gov. Rod Blagojevich has proposed borrowing $3 billion from state employee pension funds.

* In Oregon, cuts in state aid to education were so severe they spurred the Portland Public School District to cut nearly five weeks from the school year. In Colorado, many school districts have gone to a four-day week in an effort to cut costs. In his State of the State address, Gov. Holden said he did not want to allow similar reductions in Missouri.

* Kansas faces a budget problem even greater than Missouri's. There lawmakers are considering raising fees for driver's licenses and other state services, while making steep cuts in aid to local governments, transportation, social services, and universities.

* In Iowa, lawmakers are counting on trimming roughly $100 million from the state budget by following the advice of an out-of-state consulting firm on how to "reinvent government."

* Alaskans may see lawmakers dip into their Permanent Fund, a trust set-up as a repository for the state's oil revenues. While each Alaskan received about $1,500 last year from the fund, that number could fall if funds are diverted to pay for state expenses.

* California faces a daunting $35 billion deficit, a number larger than the total economic output of North Korea. There Gov. Gray Davis has proposed $20 billion in cuts that touch nearly every area of state government and asked local governments to take over funding for nearly $8.3 billion in programs. He's also asked the legislature to approve increases in sales, cigarette, and income taxes.

Budget shortfalls are so widespread nationally, the National Association of State Budget Officers has issued a 12-page list detailing ways to trim spending or raise revenue. These strategies range from delaying paychecks to state employees to removing light bulbs from soda machines and curbing efforts to eradicate marijuana grown on state land.

(The Associated Press contributed to this story)