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Governor's Office to announce further budget withholdings

December 06, 2001
By: Amanda Joyce and Julian Pecquet
State Capital Bureau

JEFFERSON CITY - Originally estimated between $150-200 million, Gov. Bob Holden's spokesman Jerry Nachtigal said state budget withholdings could be even worse, depending on the economic stimulus package currently under discussion in Washington, D.C.

Nachtigal called a portion of the package "counterproductive," and said it could end up costing Missouri tens of millions of dollars. As a result, Holden's office is keeping a close eye on Washington.

Holden is expected to announce the next round of budget withholdings sometime late next week, Nachtigal said.

As soon as these withholdings are announced, state agencies will be asked to reevaluate their budgets and find room for greater efficiency and cuts.

Appropriations committees are paying close attention to the dour economic forecasts by Budget Director Brian Long.

Rep. LaJoyce Johnson, D-St. Louis, responded to Long's presentation with a plea to upgrade Missourian's health programs to a number one priority.

"I can't keep going back to my constituents empty-handed," Johnson told Long at a legislative committee hearing on the budget situation.

Since the fiscal year began in July, Holden has withheld $323 million in what he says is an effort to keep the budget balanced.

These withheld funds came from reduced administrative costs, such as vacant positions being kept open, and delaying various building construction projects.

As to which agencies will be hardest hit by the withholdings, neither Nachtigal nor Budget Director Brian Long could say.

"It's just too early to know," Long said.

Certain programs and agencies carry more protection from withholdings than others.

"In earlier withholdings [Holden's office] has said the effects to his priorities should be kept to a minimum," Nachtigal said.

He said those priorities were education, society's most vulnerable such as children and the elderly, and law enforcement.

"We can't say definitely that there won't be future employee layoffs," Nachtigal said.

In 1996 a fund was created to help the state whenever budget difficulties arise. Known as the "Rainy Day Fund," it would be used when revenue coming into the state is well below what was anticipated. This was later amended and is now known as the Budget Reserve Fund.

The fund totals about $450 million, according to Senate appropriations staff.

Martin Drewel, assistant director for the staff, said most of that money is being used to cover cash-flow problems caused during periods in the fiscal year when state expenditures exceed income. Only about $150 million, or less, is available for other budget shortfalls, Drewel said.

Long agreed the fund is not the answer to the state's money problems.

Every dollar taken from the fund for balancing the budget must be paid back plus interest in three years. Also, Long said that every dollar pulled from the reserve fund is one less available for cash flow until revenue from income taxes arrives.

The state is now in a decreasing government mode, Nachtigal said.