Mo. lawmakers want Nixon to revise budget plan

JEFFERSON CITY, Mo. -- Missouri's revenue is falling at nearly twice the rate that was projected just two months ago, forcing officials to take a fresh look at merging state agencies, raising fees or making deep cuts to public services.

Gov. Jay Nixon held a series of private meetings Tuesday with Senate and House members to discuss the state's financial problems. He wants to revise the state's revenue estimate used to craft the state budget, then discuss ways of restructuring state government.

Republican lawmakers told the governor he should take the first step by providing them with a new budget proposal that includes additional recommendations for cuts.

In January, Nixon proposed a $23.9 billion operating budget for the 2011 fiscal year that was based on two assumptions that now appear doubtful. His budget plan figured that:

* Missouri would reap $300 million if Congress extended a stimulus provision that increased Medicaid payments to states. But the enhanced Medicaid payments are not included in a bill that passed the Senate.

* Missouri's general revenue would decline by 6.4 percent this fiscal year but would rebound to grow by 3.6 percent in the 2011 budget cycle, which begins July 1. Both of those rates now appear optimistic.

Figures released Tuesday by the Office of Administration show Missouri's revenue was down 12.7 percent through the first two-thirds of the fiscal year, compared to the same point the previous year. February revenue was particularly bad -- down 14.6 percent from February 2009.

Senate Appropriations Committee chairman Rob Mayer said Nixon acknowledged in a meeting with Senate Republicans that the budget he submitted in January was not attainable.

"He talked about the fact that we're going to have to take this opportunity in the history of the state -- this downturn in the economy -- and seriously look at doing some restructuring in our budgeting and in our state government," said Mayer, R-Dexter.

Mayer said Republicans suggested the governor should submit a new budget proposal -- thus bearing the burden for recommending cuts instead of leaving it solely to legislators to figure out.

House Budget Committee chairman Allen Icet, who also met Tuesday with the governor, said lawmakers will work with Nixon on revising the revenue estimate. But "we believe it's up to the governor to give the direction on where we go" with the budget, added Icet, R-Wildwood.

Nixon said he would work with lawmakers on new ideas to save money but appeared reluctant Tuesday to submit a revised budget plan.

"Starting over in the budget process at this point, I'm not sure that's the best way to go about it," Nixon said.

The House Budget Committee plans to take up the budget when lawmakers return March 15 from a one-week break. Icet said he hopes Nixon can provide recommended cuts by then.

Mayer said it may take more than just spending cuts to solve Missouri's financial problems. Divisions within state departments may have to be combined to create efficiencies. And "perhaps some of the services that have been provided by the state of Missouri will have to be driven more by fees," Mayer said.

That would mark a significant change for Nixon and Republican legislative leaders, who have equated fee increases to tax increases -- which they have pledged not to impose.

The Missouri Budget Project, which analyzes fiscal policies for their effect on the poor, said the state is long overdue for a revenue increase. It said tax cuts passed during the last few years have decreased state revenue by about $300 million per year, and Missouri misses out on more than $200 million by not capturing sales taxes from Internet purchases.

"The only responsible course of action in the face of the state's continued decline in revenue is a balanced approach that includes measures to grow our state's budget collections to keep up with the needs of Missouri residents," said Amy Blouin, the group's executive director.