House Happenings for March 19th

State Representative Jim Whorton
The proposed state budget for FY09 has finally moved through the Missouri House Budget Committee on its way through the process. Our final meeting of that planning phase was an eleven-hour marathon with only two short comfort breaks. During that time we addressed 191 proposed amendments to the package, which had been presented to us by the budget chair and his staff. The budgeting process begins with each department of state government making their respective requests for spending authority, to the Governor’s office where adjustments are made based on current revenue estimates and overall statewide priorities. We have six different appropriation committees that further study and refine the "Governor’s Recommendations". Each committee has oversight of various departments (I serve on Appropriations for Agriculture, Natural Resources and Conservation.) and hold several public hearings as they develop proposals which move on to the House Budget Committee. I also serve on that committee and the shear volume of information we go through is simply unbelievable. We have met daily for over three weeks and have now delivered the 13 House bills, which make up the primary annual budget, to the full House for consideration. There are a few other specialized budget bills that cover capital expenditures, supplemental spending requirements, etc. and those will be addressed separately.
This year’s budget totals nearly a billion dollars more than a year ago and is projected at $22.43 billion including $8.69 billion of General Revenue (GR), $6.36 billion Federal Funds (FF) and $7.38 billion Other Funds (OF). In comparison to the current proposal the FY08 budget was $21.49 billion; $8.21 GR, $6.15 FF and $7.12 OF. As we have mentioned in earlier discussions, we have limited flexibility when considering federal funds and other funds. So let’s look at some details regarding what is known as General Revenue, which is increasing by about $500 million from last year. General Revenue is mostly the "consensus revenue estimate" agreed upon by the Governor’s staff in consultation with majority party budget leaders from both the House and Senate. It is made up of the expected annual taxes and fees from a variety of sources. In addition, General Revenue receives annual allotments from the "tobacco settlement", lottery proceeds, etc. In most years we have a reasonable beginning balance left from the previous year’s budget, which is necessary for "cash flow" purposes, just as you and I need a minimum checkbook balance.
Some of us on the Budget committee have a very real concern about what seems to be a rapidly declining "year-end balance". It appears we are increasing spending at a higher rate than revenues are responding. We began FY08 with about $600 million on hand, but are projecting FY09 to begin with about $525 million. For planning purposes, we are projecting revenue growth during FY09 at about 3.4 percent, which would only increase revenue by less than $300 million dollars. You must appreciate these estimates are only a guess, and they will never be exactly "right-on", especially if our economy is actually in a "slow-down" or eventually develops into a recession, revenue could be substantially lower. Our budget plans, in light of the above predictions, would indicate an ending balance of less than $200 million at the end of FY09 and that only has inflationary adjustments without new decision items. If that projection becomes reality, in order to avoid overspending the entire balance the following year, than FY10 would require severe adjustments, either in spending reductions or revenue increases. I’m not saying the "sky is falling" but I am raising some concern. It definitely is time to consider a number of options and check out some alternatives.
If you have any questions, concerns or opinions about any bills or any other issue, please feel free to contact Pam in Jefferson City. Our number there is 573-751-1649 and the email address is jim.whorton@house.mo.gov. You can also contact me at the district at 660-359-3988.