Missouri looks to cut $200 million more from budget
This article first appeared in the St. Louis Beacon, Jan. 5, 2010 - The December holidays may have been a boon for store cash registers -- but the month has been a bust for the coffers of the state of Missouri.
State Budget Director Linda Luebbering said Monday that December's revenue collections were much lower than expected, a key reason her staff is now revising her prediction of only a few weeks ago that Gov. Jay Nixon wouldn't have to make another round of painful budget cuts for the current fiscal year.
On Tuesday, the final numbers were stark: the state's December income is down 21.7 percent compared to December 2008, from $785.6 million to $615.2 million. That's the largest one-month percentage drop so far, since Nixon took office last January. Earlier this fall, Luebbering and her staff were seeing much smaller declines.
Luebbering said the governor likely will have to make $200 million in additional trims to balance the state's revised estimated budget income of $6.97 billion for the fiscal year that runs through June 30. This $200 million comes on top of $634 million that Nixon already made for this current fiscal year.
To ease the pain, Nixon will make the next round of cuts within weeks, his budget director said.
The upshot is that Nixon's administration now predicts the current fiscal year's income will be 6.4 percent below that of the previous fiscal year (2009) -- a significant change from Luebbering's rosier estimate of a month ago that the current year's collections would lag only 4 percent.
The revised estimate was reached last week during bipartisan meetings between Nixon's budget staff and those of legislative leaders.
Nixon's office announced early Monday that the session also produced a state income estimate for the coming fiscal year (2011) of $7.223 billion. That jointly agreed estimate will be the template for the budget crafted by the Democratic governor and the GOP-controlled Legislature over the next few weeks.
But if the reality of recent budgets is any indication, the estimate for fiscal year 2011 may turn out to be too optimistic. It predicts state revenue growth of just over 3 percent -- but the state hasn't seen such an increase in years.
(Even if that income increase holds, the 2011 budget would still be down about $780 million from the 2008 budget, which was the last one before the national and state economy took a nose dive.)
Nixon and the Legislature expect to use some of the saved federal stimulus money to ease the cuts in 2011. But unless the economy dramatically improves, the financial picture looks particularly bleak when all parties craft the FY2012 budget a year from now.
As it stands, aside from public education and state universities, which agreed to a 5 percent cut in return for no tuition increases, many state departments are preparing for the governor or the Legislature to propose cuts of close to 10 percent in their 2011 budget.
MEDICAID ROLLS SHOOT UP
The state's decline in revenue comes as its Medicaid rolls are shooting up -- a fact that puts further pressure on Missouri's budget because the state foots about 30 percent of its Medicaid bill. The rest is covered by federal money.
Luebbering blamed the wave of job cuts statewide over the past year.
On Tuesday, the state Department of Social Services said that Missouri had 872,553 on the Medicaid rolls as of last November, and 924,000 are projected by November 2010. (That's about 50,000 below the figure that Luebbering had stated on Monday; a Social Services spokesman said that the budget director had included some people -- such as pregnant women -- who aren't generally included in the Medicaid numbers.)
In any case, the revised numbers are just short of the numbers that prompted the GOP-controlled state Legislature in 2005 to trim the state's eligibility standards drastically, so it's now among the strictest in the country.
In March 2005, the state had 993,000 on its Medicaid rolls; by May 2006, it was down to 836,000, according to the state's Department of Social Services. (The lowest tally for Missouri's Medicaid rolls, since the cuts, appears to be 803,000 in July 2007.)
Missouri's sharp increase in Medicaid recipients has come about without any change in the state's eligibility level, which limits most adults to earning no more than 20 percent of the federal poverty level.
If Congress enacts health-care reform, the final measure is expected to require states to increase their Medicaid income eligiblity standard to 133 percent of the federal poverty level.
Such an increase would add about 250,000 more Missourians to the state's Medicaid roles, the Department of Social Services says. Although the federal government is promising to cover the extra cost for a few years, Missouri would likely have to foot that added bill at some point.
And unless the state's income picture improves, Luebbering said, the result will mean more budget cuts in other state programs.
December Revenue Figures
Individual income tax collections
- Decreased 10.4 percent for the year, from $2.64 billion last year to $2.36 billion this year.
- Decreased 26.5 percent for the month.
Sales and use tax collections
- Decreased 6.8 percent for the year from $962.0 million last year to $896.3 million this year.
- Decreased 1.8 percent for the month.
Corporate income and corporate franchise tax collections
- Decreased 13.1 percent for the year, from $253.4 million last year to $220.1 million this year.
- Decreased 13.5 percent for the month.
All other collections
- Decreased 5.4 percent for the year, from $225.0 million last year to $212.8 million this year.
- Decreased 16.1 percent for the month.
- Increased 2.6 percent for the year, from $357.2 million last year to $366.6 million this year.
- Increased 2.4 percent for the month.