Blunt: State's economy is on the move

~ The governor also proposes new spending on education, health care and prisons. Democrats say state is on the fast-track to the bottom.

JEFFERSON CITY, Mo. -- Gov. Matt Blunt projected a sunny state of affairs Wednesday night, declaring Missouri's economy and budget strong a year after he took office and proposing new spending on everything from education to health care to prisons.

Blunt's second State of the State speech drew a sharp contrast to his first, when he proposed wide-ranging government cuts and the elimination of health-care coverage for thousands of poor people to bring into balance a state budget that he said had grown out of control.

"Just one year after we began to work together, the state of the state is strong," Blunt said to the thunderous applause of fellow Republicans in a nearly 50-minute speech to a joint session of the House and Senate. "Today, the sun has risen and Missouri's economy is on the move."

Blunt said his pro-job policies enacted last year by the Republican-led Legislature have resulted in the average addition of more than 500 Missouri jobs a week and a solid growth in state tax revenues. If enacted by lawmakers, his proposed $20.9 billion state operating budget would increase total state spending by 8 percent over this year's expected appropriations.

Unlike last year, not a single government service to Missourians is proposed to be cut, said Blunt's administration commissioner, Michael Keathley. But neither does the budget propose to restore any of the Medicaid cuts enacted last year over the objection of Democrats.

Citing the Medicaid cuts and such things as an unemployment rate in the bottom tier of states, Democrats cast a much gloomier outlook for Missouri.

"From one government failure to another under Governor Blunt's administration, this state is on a fast-track to the bottom, and is dragging each and every citizen along with it," Senate Minority Leader Maida Coleman, D-St. Louis, said in remarks prepared for the official Democratic response.

Under Blunt's proposal, the $6 billion Medicaid program still would receive the largest increase -- $658 million in state and federal funds -- and comprise the largest portion of the state budget, 29 percent of the total. Had cuts not been made last year, Blunt said Medicaid would have cost an additional $935 million.

Some Democratic lawmakers rallied earlier Wednesday with about 100 people supporting the restoration of the Medicaid cuts. But Blunt had a sharp rebuttal to such calls.

"For those who continue to clamor for a return to the old way I ask that you be candid. Be honest with the people of Missouri and tell them what programs you would cut or what taxes you would raise," Blunt said as Republican lawmakers stood with applause and Democrats sat silently.

Embracing the general approach of a legislative reform committee, Blunt called for a broader overhaul of the Medicaid program, stressing personal responsibility, the elimination of waste and fraud and proposing $25 million in state funds to improve medical technology.

To try to reduce the number of uninsured, the governor also called for such things as new incentives for employers to provide health insurance and new tax breaks for those who buy their own insurance.

Blunt proposed a $167 million increase in state aid to elementary and secondary schools, including $137 million to fund the full amount called for under a new school funding formula enacted last year.

And he reiterated his support for a proposal that would require school districts to spend 65 percent of their money on items related to student instruction. In response to some hesitant lawmakers and school administrators, Blunt indicated he is willing to expand the proposed definition of what qualifies as classroom expenses.

Among other spending increases proposed by the governor:

* A 2 percent increase for state colleges and universities, bringing their total to $874 million.

* $120 million in bonds to replace an old women's prison at Chillicothe with a new, expanded facility. Additional money would open new sex offender units and community supervision centers within the Department of Corrections.

* A 4 percent pay raise for most employees, with larger increases for some state nurses, law officers and prison guards, at a total cost of $105.5 million when fringe benefits are included. Also proposed are reimbursement rate increases for residential care centers for abused, neglected and mentally ill children.

For the first time since 1999, the governor's budget proposes to drop the total number of full-time state employee positions below 60,000 -- a net decrease of 194 positions. But Keathley said nearly all of that would come from voluntary departures, not layoffs.

House Speaker Rod Jetton, who was briefed on the budget before Blunt's speech, declared it good.

"It's not like rain is falling with money, but it's better than I've ever seen," said Jetton, R-Marble Hill, who is entering his sixth year in the Legislature.

Democratic Rep. Connie Johnson, of St. Louis, also had praise for Blunt's speech.

"There seemed to be a recognition of Missouri's most vulnerable citizens. I was actually quite surprised," Johnson said.

But other lawmakers expressed concern about whether the state could afford to switch so abruptly from last year's cuts to this year's spending proposals.

"He kind of sounded like a drunken sailor to me -- all the money he's spending," said Rep. Trent Skaggs, a Kansas City Democrat who was chatting with Republican Rep. Brad Lager, of Maryville, after Blunt's speech.

Lager had called for a freeze on new state programs. He warned: "There are many national economic indicators out there that are showing our economy is slowing."

Blunt had revealed many of his key policy proposals in advance of Wednesday's speech. He is calling for new restrictions on the use of eminent domain to take private property for development, tougher laws for child sex offenders and a requirement that motor vehicle fuel sold in Missouri contain a 10 percent ethanol blend.