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Government, Politics & Issues

Nixon announces $301 million in budget cuts, including the loss of 250 state jobs

This article first appeared in the St. Louis Beacon, June 18, 2010 - Public school transportion, college scholarships and state workers took most of the hits in today's $301 million in budget cuts announced today by Gov. Jay Nixon.

About 250 state jobs are to be eliminated, on top of 2,200 jobs cut in earlier budgets. State scholarship programs are to be cut by almost $65 million, much of it from the need-based Access Missouri program. 

State aid for public-school bus service was trimmed almost by half, to $82.8 million (down from $152.8 million), in the budget for the fiscal year that begins July 1.

Chris Nicastro, commissioner of elementary and secondary education, sent a memo to school superintendents in Missouri about the education cuts.

Noting that the biggest hit came from the $70 million reduction in transportation funds, she said:

"If there is good news in this, it is that you know NOW what the restrictions will be for next year and that you have time to adjust your budget, your transportation contracts and your policies. Parents will also have time to make arrangements if necessary. "

She said that the department would send more details soon.

"These are tough times," Nicastro concluded. "We keep saying that, and it continues to be true. I'm confident that your leadership will get your districts through this with essential services in place. Let me know if I can provide support for you as you make some tough decisions."

The Department of Elementary and Secondary Education estimates that the state will now cover 23 percent of a district's eligible transportation costs, down from an earlier estimate of 42 percent.

Many of those affected were swift to register, at minimum, their concern.

Members of Independent Colleges and Universities of Missouri declared that the governor "dealt tens of thousands of students from working and low-income Missouri families a devastating blow" by Nixon's 60 percent cut to the Access Missouri scholarship program.

Leroy Wade, assistant commissioner for student financial aid at the Missouri Department of Higher Education, said that some of the scholarship cuts will be offset by a $30 million need-based program from the Missouri Higher Education Loan Authority that was authorized last week. But as of Thursday afternoon, details were not available.

"It's not clear how this is going to play out," Wade said.

The Missouri Budget Project, an advocacy group, said that parents with school-age children were being asked to bear the brunt of the latest trims. "College scholarships, school transportation, and virtual schools for children with a disability all received devastating reductions in funding, " said Amy Blouin, the group's executive director.

"In addition, cuts to critical health programs will also affect many Missourians, including those in rural areas who use federally qualified health centers, and anyone seeking mental-health services."

The group noted that most of the latest state job cuts come from the three departments of Mental Health, Health and Senior Services, and Social Services -- all of which had been hit by the earlier rounds of trims.

Worst may be over

Nixon said during his news conference this morning that he didn't enjoy cutting programs, services and jobs. "I do not make these decisions lightly," he said, but added that -- by law -- he must balance Missouri's budget.

Nixon also emphasized that he has repeatedly made the cuts as early as possible during a budget year, out of the belief that early action prevents even larger cuts months later. Since taking office in January 2009, he has cut more than $1 billion in state spending over the past two budgets.

Actually, the $301 million in announced cuts for the 2011 budget was less than the $350 million that the governor had predicted weeks ago, after the Legislature had finished its work. Nixon had contended that lawmakers had failed to make adequate trims, based on the state's continued drop in revenue over the last two years.

But today, he and Budget Director Linda Luebbering indicated that they were heartened, somewhat, by recent monthly figures that showed slower declines or slight increases in state income tax and sales tax collections.

Nixon and Luebbering also noted that today's trims are officially budget "restrictions," rather than outright cuts, which means the money could be restored if the state's economic situation improves over the coming months.

Still, the governor and his budget team didn't leave much hope that the money would go back into the budget.

"It's possible, but I definitely recommend that nobody count on it,'' Luebbering said in an interview this afternoon.

Luebbering said that no more cuts are likely needed during the final weeks of the current budget year, which ends June 30. That contrasts with a year ago, when Nixon was making trims during the last weeks of the 2009 fiscal year because of unanticipated continued drops in state income.

All told, for the current fiscal year, Luebbering said that Nixon was forced to make about $900 million in trims. Luebbering projected that the state's revenue for the year will end up down 9.6 percent, compared to the previous 2009 fiscal year.

That said, Nixon's budget staff is hopeful that the downward slide is over. The 2011 fiscal-year budget projects a growth of 2.2 percent -- the first growth in three years.

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Access Missouri versus Bright Flight

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The independent college group indicated in its statement decrying today's cuts that it believed it was unfair that Nixon trimmed the merit-based Bright Flight scholarship program by only 25 percent, to $12.3 million from $16.4 million.

"We are hopeful that the dream of achieving a college education has not moved out of reach for many students from working-class and lower-income Missouri families," said Marianne Inman, chairwoman of Independent Colleges and Universities of Missouri. "The magnitude of the reduction to our state's only need-based financial aid program is a disservice not only to financially deserving students but to Missouri's workforce development initiatives."

Wade said that in the case of Bright Flight, money allocated to those scholarships had stayed steady at about $16 million for the past several years. Lawmakers had authorized higher levels in several recent budgets, but they were reversed when the downturn hit.

He said awards made to students are renewable annually, with about 8,000 students served this year. Because of the reductions, Wade said, scholarship amounts are likely to be cut as opposed to trimming the number of students who receive the aid.

He said that cuts in financial aid were not surprising, given the state's budget situation. "Those are hard choices," he said.

"This continues to erode the effectiveness of that program," he said. "It doesn't have the buying power it has had."

Inman with the association said, "While we recognize that difficult financial times for the state of Missouri necessitate difficult decisions, we believe that Gov. Nixon has made the wrong decision for Missouri's neediest college students."

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Special session likely

Although the governor didn't mention it today, he previously has blamed part of his new round of trims on the Legislature's failure to approve a plan to revamp the state's pension plan for its workers, which he says could save the state at least $10 million a year.

Nixon is hoping that the pension changes, which passed the state Senate but died in the House, might be resurrected if he calls a special session to consider a plan -- which also died last session -- to earmark up to $15 million to pay for tax incentives to encourage Ford Motor Co. to keep open its Claycomo plant near Kansas City.

Nixon indicated today that he is likely to call a special session, which aides say would begin later this month. A one-week session would cost the state an additional $125,000.

Despite his tax-break plans for Ford, Nixon's trims announced today also are banking on saving $47 million through less spending for the state's tax credit programs, which largely go for economic development and historic preservation.

The governor's administration has little direct control over who gets the tax credits and how much in total is doled out, and the Legislature declined last session to accede to Nixon's request for more oversight powers. But in today's budget-cut documents, his staff indicated they expect fewer requests for such credit -- and tighter state scrutiny before the credits are granted.

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