CHICAGO — Missouri Gov. Jay Nixon late last week praised the Legislature for sending him a “fiscally responsible” $23.3 billion budget for fiscal 2011 that eliminates red ink through cuts rather than tax hikes, but called on lawmakers to approve a proposed government restructuring and tax-credit reforms that could trim future costs.
Lawmakers trimmed about $500 million off Nixon’s original proposal, unveiled in January, after revenue estimates were revised downward in both the current fiscal year and the next, which begins July 1.
Last month, officials announced that revenue was down by $700 million, or 12.7%, compared to last year.
The cuts include the elimination of 1,000 state positions.
Higher education was mostly spared, seeing only a $40 million reductions, in order to meet a deal struck between Nixon and the state’s public universities to hold tuition steady. Funding for K-12 education will remain at about the same $3 billion as was allocated in fiscal 2010.
In a statement, Nixon praised lawmakers for their bipartisan work. The governor is a Democrat and the Legislature is controlled by Republicans.
“Because of those efforts, and despite the historic challenges we have faced, we have passed a fiscally responsible budget without raising taxes and without raising college tuition for Missouri students for a second year in a row,” he said.
Democratic lawmakers complained that the state should have looked at revenue generating measures, and state budget officials warned that revenue projections in the budget are still optimistic and could fall short.
Nixon called on lawmakers to pass government restructuring legislation that would consolidate some departments, sell off state assets, and privatize services to save money in future years.
His proposals include consolidating the Department of Elementary and Secondary Education with the Department of Higher Education, merging the highway patrol and water patrol units, and privatizing some services like collection of child support.
Nixon wants to sell some vehicles in the state fleet and some nonessential office buildings, eliminate some state holidays for state workers — such as former President Harry S. Truman’s birthday — , and eliminate some jobs.
He also wants to consolidate the state’s 60 tax-credit programs, which cost about $567 million last year, under the Economic Development Department and limit them to about $314 million annually.
“The opportunities for cost savings truly depend on the passage of numerous additional bills that will right-size, restructure and refocus state government,” Nixon said in a statement.
The budget includes no new debt, and the Missouri Highways and Transportation Commission has exhausted its borrowing authority.
Early in the legislative session, support was mounting for a new state bonding program.
Nixon had indicated he could sign a building program that was crafted through legislative consensus and U.S. Rep. Chris Kelly, D-Columbia, proposed a bill that called for a public vote in November on $800 million of general obligation borrowing for higher education projects.
The measure failed to generate much support, however, as lawmakers’ attention was instead focused on dealing with dwindling revenues.
The triple-A rated state, which is a rare issuer, will competitively sell $125 million of advance and current general obligation refunding bonds in July, said Stacy Neal, assistant director in the Office of Administration’s division of accounting.
“It’s a great deal for the state that will shorten the life of the state’s GO debt by 10 years, generate some budgetary savings next year, and result overall in 8% in present-value savings over the life of the debt,” Neal said.
The state has just $530 million of outstanding GO debt.
