Jan. 28JEFFERSON CITY Missouri Gov. Jay Nixon is counting on a massive federal bailout package from Congress to balance his first state budget and keep a campaign promise or two.
The spending plan Nixon unveiled Tuesday night cuts hundreds of millions of dollars from the current budget and the next one, largely by eliminating 1,329 state jobs and 20 programs.
"After just two weeks in office, we are proposing the smallest state bureaucracy that Missouri has seen in a decade," the Democratic governor said in his State of the State address. "The reduction I am proposing today represents the largest single reduction in the state's bureaucracy in modern history."
Nixon also proposed returning 35,000 adults to Medicaid, the low-income health-care plan that Republican Gov. Matt Blunt slashed in his first budget four years ago.
Nixon pitched tens of millions in new job-training programs, millions more to extend high-speed Internet service to rural Missouri and expansion of a health-care program for children
Given the sour economy, the program expansion was too much for some Republicans.
"Let's add this. Let's expand that," said state Rep. Allen Icet, a St. Louis County Republican who is chairman of the House Budget Committee. "I'm surprised there were that many new programs."
Republicans also charged that Nixon was making a grave mistake by counting on the infusion of a projected $809 million from Congress in the bailout package known as the American Recovery and Reinvestment Act. That money has yet to be formally approved, and Republicans fear that it may come with strings attached that could hamper how Missouri spends it.
"A budget based on a one-time bailout is no long-term plan," said Republican Lt. Gov. Peter Kinder in his party's formal response to Nixon's address. "We need an enduring vision for our state's economy, not a budget propped up on debt that will have to be paid back by our children and grandchildren."
Nixon and his budget staff, however, stressed that economic growth in coming years would enable the state to afford expenditures initially financed with federal funds.
"When that federal stimulus ends, if we have taken the advantage we believe we are taking, we will replace that hole with regular tax revenue," said Paul Wilson, legal counsel for the governor's budget office.
The $23.1 billion budget Nixon proposed comes amid a faltering national economy that has sent jobless rates soaring and state revenues plummeting.
"These are historically difficult times, and they will require historic levels of cooperation," Nixon said.
Two weeks into the session, the bipartisan spirit between the governor's office and the Republican-led General Assembly is holding, Nixon said to a few chuckles.
"Some doubted a new tone in Jefferson City was possible," the new governor said. "So far, I am pleased to report that together, we're proving the naysayers wrong. Sure, it's been just two weeks. But it's been a productive two weeks."
That the two parties have dramatically different priorities and approaches to the budget crisis was evident throughout Nixon's 45-minute address. Several times the governor drew vigorous applause and even standing ovations from Democrats, while Republicans offered scattered applause or hardly any at all.
"We will balance our budget this year, next year and the year after that," Nixon said. "We won't place the burden on the weakest among us. We won't abandon our priorities or shared principles, and we won't raise taxes."
Members of both parties stood in response to the no-tax-increase call.
Nixon proposed cuts of $261 million from the current-year budget and $250 million for the budget year that begins in July.
Nixon's budget for the coming year is merely a proposal. The legislature, which will use the governor's suggestions as a starting point, has until May 8 to submit a budget back to Nixon for approval.
For next year, Nixon's budget reductions are achieved primarily through job cuts. The proposal eliminates 1,329 state jobs, the largest cut to the state bureaucracy in decades, officials said.
The job cuts will yield savings of $170 million, but officials stressed they would not affect front-line services.
"What you won't see is a decrease in the people who do the actual grassroots work of social services," said Wilson of the governor's budget office. "The consumers of governmental services will not see a difference from these cuts. Inside government, we will."
Additional cuts totaling $85 million will eliminate 20 state programs and reduce funding for 30 more, including substantial cuts to a Medicaid case-management program and University of Missouri Extension.
In the current budget year, which ends June 30, about $70 million in cuts will come by deferring maintenance and canceling capital improvement projects around the state. Nixon will save an additional $107 million by asking departments to make cuts and $85 million more by rejecting budget requests made over the past several months.
The layoffs will begin immediately, official said, to help the cost-cutting in the current year and to ensure salaries and benefits are off the books by the start of the fiscal year, which begins in July.
Despite the cuts in the coming year, spending is slated to rise 2.25 percent over the current year, thanks to that expected $809 million boost from the federal stimulus package currently being heard in Congress.
Budget officials called the $809 million figure conservative and suggested aid to Missouri could ultimately be more by the time Congress passes a package.
The additional funds allow Nixon to uphold the agreement he struck last week with the state's universities to hold state funding steady and, in exchange, freeze tuition rates.
Included in the budget is an expansion of eligibility for Medicaid, the state health-care program for the poor and disabled. Under Nixon's proposal, the eligibility would rise to encompass all adults whose earnings are at or below 50 percent of the federal poverty level an increase of about 35,000 people.
The budget also includes expansion of the State Children's Health Insurance Program to cover more than 27,000 additional Missouri children.
The budget also includes a 3 percent pay raise for all state employees.
To reach Jason Noble, call 573-634-3565 or send e-mail to jnoble@kcstar.com. To reach Steve Kraske, call 816-234-4312 or send e-mail to skraske@kcstar.com.
