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State budget short $220 million, layoffs possible

December 13, 2001
By: Robert Sandler
State Capital Bureau

JEFFERSON CITY - Missouri's budget will be slashed by $220 million today by Gov. Bob Holden in response to the weak economy, and state employee layoffs could loom on the horizon.

The state has had to cut spending to the tune of $400 million over the last two years due to shortfalls in revenue predictions.

The governor will announce specific withholdings at a news conference today, but has pledged not to cut spending for primary and secondary education.

Even before his announcement, the governor was coming under attack from the American Cancer Society, which predicted Holden would use tobacco settlement money to help balance the budget.

The governor's chief spokesman did not rule out that possibility -- saying that everything was on the table for cuts except primary and secondary education.

In the last two budget years, Holden has used tobacco settlement money to balance the budget. Critics say the money should be reserved for health-care and anti-smoking programs.

Elementary and secondary education now form "Holden's number one priority," said spokesman Jerry Nachtigal.

"He believes the children are our future, and that's just too important to do major cuts in," Nachtigal said.

Nachtigal said he expects state employees will not be laid off as a result of the current budget cuts, but the state may have to consider them later on.

The state could also lose more revenue due to an economic stimulus bill currently moving through the U.S. Congress. The bill would cut some corporate taxes by 30 percent, and because Missouri ties its state taxes to federal taxes, the state could see a loss of $70-100 million in revenue.

That potential loss would make layoffs necessary, Nachtigal said.

"If Congress passes that economic stimulus legislation with that provision in it, there is no way that we could not have state layoffs in the very near future," Nachtigal said.

"The governor is saying yes, please pass a good economic stimulus bill, but don't pass a bill that's going to force him to make another $100 million in budget cuts to offset that legislation," he said.

The bill already passed through the U.S. House and is moving through the Senate.

U.S. Rep. Kenny Hulshof, R-Columbia, voted in favor of the bill, and joined three other Republican congressmen from Missouri who sent Holden a letter defending their votes.

The letter says that states are not required to tie their corporate taxes to federal tax law, and cites the bill's positive impact in terms of job growth and private sector investment.