CHICAGO — Missouri Gov. Jay Nixon this week unveiled a $23.9 billion all-funds fiscal 2011 budget that banks on an economic rebound, federal funds, and cutting spending and jobs to keep the state in the black.
The budget anticipates tax revenues of $7.2 billion, up from the nearly $7 billion the top-rated state expects to collect in the current fiscal year. The fiscal 2010 budget originally relied on $7.7 billion of revenue, but revisions forced Nixon to cut spending and jobs last year.
“Our early action and sound management have helped Missouri keep its spotless triple-A credit rating. That saves taxpayers millions in interest each year. And it signals investors that Missouri is where smart money goes to grow,” the governor said in his state of the state address Wednesday night. “By balancing the budget without raising taxes, making hard choices, and managing debt, Missouri is in a strong position to accelerate out of this downturn.”
The proposed 2011 budget relies on savings from the elimination of 544 positions, $253 million in spending cuts, $27 million from surpluses in non-general fund accounts, and $300 million in additional federal stabilization funds the state hopes to receive.
“This year, although we’re in better shape than other states, we still face sobering fiscal challenges,” Nixon said. “Revenue projections for fiscal 2011 are austere — we’ll have less revenue than we did in 2009. It will take the patience and good faith of every person in this General Assembly — all 163 members of the House and all 34 members of the Senate — working as a team, to manage our limited resources and move Missouri forward on the path to prosperity.”
While Nixon portrayed revenue projections for the next fiscal year that begins July 1 as austere, the budget relies on strong growth over fiscal 2010 levels. Income taxes are expected to rise by 3.7% to $4.8 billion after a 5% drop this year over fiscal 2009.
His budget project sales taxes to climb 2.7% to $1.8 billion after a 5% drop this year, and corporate income taxes are expected to rise 19% to $352 million after a 17% drop in fiscal 2010.
The state’s largest expenditures include $3 billion for public education, up by $18 million over fiscal 2010 but nearly $90 million short of meeting the full-funding level under the aid formula the Legislature has observed. Other big-ticket items are $900 million for higher education, $8 billion for Medicaid, and $1 billion to fund employee benefits.
To promote job growth, Nixon proposed a plan dubbed the Missouri Science and Innovation Reinvestment Act that would establish a new fund, with tax revenue from biotech companies, to provide incentives to draw more high-technology and research businesses to the state.
Nixon pressed for bipartisan cooperation in the new legislative session to adopt a balanced budget. The governor is a Democrat and Republicans hold a 23-to-11 majority in the Senate and an 87-to-72 majority in House, where there are four vacancies. Republicans questioned the proposed budget’s reliance on federal funds that are not yet approved, but praised the lack of new or increased taxes.
No new bonding plans are included in the budget, according to Mark Kaiser, director of the state’s Division of Accounting, which includes debt management. Nixon has indicated he could support a bond-funded building program that is crafted through legislative consensus, but he has not elaborated on it.
Missouri Rep. Chris Kelly, D-Columbia, last week submitted to the General Assembly a bill that calls for a public vote in November on $800 million of general obligation borrowing for higher education projects.