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No State Layoffs From Budget Withholdings

August 30, 2001
By: Nicholas Rummell
State Capital Bureau

JEFFERSON CITY - Not one state employee would be laid off under the final budget-withholding plan unveiled Thursday by Gov. Bob Holden.

While asking agencies for plans for cuts as deep as 18 percent, Holden's final budget imposes only a 2.3 percent in the state's General Revenue operating budget.

In addition, Holden's plan would divert $25 million of tobacco settlement funds to help balance the budget and impose a hiring freeze on some mid-management vacancies.

But in announcing his plan, Holden stressed that state-government workers would not be fired.

"The first and foremost priority is to protect our front lines," said Holden of critical state jobs, such as teachers, parole officers and health officials. "Employees are our most valued asset."

However, Holden was unable to speculate on whether decreases in equipment and travel costs would affect worker morale or efficiency.

"The bottom line is that they have a job," he said.

House Democratic Caucus Chairman Ted Farnen, D-Mexico, isn't surprised by the types of withholdings, and believes that Holden is doing the right thing.

"These are difficult times," he said. "But I am glad to see that priority issues such as education are protected."

But some GOP legislators, among them Senate President Pro Tem Peter Kinder and House Floor Leader Catherine Hanaway, have expressed concern over Holden's use of executive order to institute the withholdings.

"He should have known that there would be this budget problem," said Hanaway, suggesting that Holden could have used veto powers to solve spending when he received the original budget.

"I am concerned that he is using a band-aid approach to a large problem," she said.

In addition to budget reductions, Holden also ordered his Economic Development Department director to cut $14 million in tax credits.

According to State Budget Director Brian Long, the administration hopes to "spread out the impact" on tax credit programs by consistently evaluating the amount of claimants and efficiency.

Administration officials said Thursday that an improving economy might allow release of some of the withheld funds later in the fiscal year.

While telling agencies not to count on that, Holden did express a hope that state government had seen the worst of the budget crunch.

"I hope this will be the last major withholding," said Holden.

The state's fiscal year began July 1.

Earlier this year, the governor had announced a eight percent withholding in state funds for higher education institutions, including the University of Missouri.

Among the various state agencies, budget withholdings ordered by the governor ranged from zero to as high as 23.6 percent.

State law provides an automatic three percent withholding that is not released unless the governor decides the state's budget is balanced.

Thus, under the governor's latest budget plan, some state programs actually got extra funds from release of the three percent withholding.

Some of the programs without any budget reduction include a methamphetamine anti-drug program, utilities for state prisons and various mental health programs.