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Rainy Day Debate Heats Up

May 08, 2002
By: Brian Connolly
State Capital Bureau

JEFFERSON CITY - On the eve of expected House debate about borrowing from the state's Emergency Reserve Fund, Missouri's governor warned of education budget cuts, delayed tax refunds and state worker furloughs if House Republicans blocked his plan to balance this year's budget.

But the House GOP leader said she was not convinced, still opposed the governor's plan and said there were other ways to balance the budget.

The state faces a $230 million revenue shortfall for the remainder of the fiscal year ending June 30. Last week Holden proposed taking $120 million from the Rainy Day Fund and $50 million from the state's tobacco settlement to make up the shortfall. On Tuesday the Republican-controlled Senate overwhelmingly approved that proposal, which is part of a bill sponsored by Senate Appropriations Committee Chair John Russell, R-Lebanon.

House Republican leader Catherine Hanaway, R-St. Louis County, said she disagrees with Senate Republicans that the current shortfall requires use of the Rainy Day Fund.

"We don't think we need to borrow money to balance the budget," she said.

Hanaway said that a $91 million lapse in state funds appropriated but not spent in the current fiscal year could be used to bridge the budget gap. But State Budget Director Brian Long said the majority of those funds must be kept for cash flow purposes and are unavailable for agencies to spend.

The House Budget Committee approved the bill on Wednesday in a 15-11 vote, mostly along party lines. In a separate vote, Republicans on the committee did support use of tobacco settlement funds.

In a late-day press conference on Wednesday Holden called on House Republicans to support use of the Rainy Day Fund when it comes up for debate today.

"I'm trying to get these people to face up to the problem now," Holden said. "Quit delaying and pushing it off into the future."

Long said payments of approximately $145 million for K-12 education, $83 million for state employee payroll, and $77 million for higher education could be targeted for withholdings.

The UM system, including University Hospitals and Clinics, is scheduled to receive $69 million from the state in the next two months, said UM spokesman Joe Moore. University administrators are planning for the possibility of withholdings, he said.

UM lobbyist Jim Snider said a myriad of options, including furloughs, are being considered.

"Your options are limited because you're talking about a massive amount of money in a five to six week period of time," Snider said.

Approximately $230 million in tax refunds for about 500,000 Missourians have been held up because of the current shortfall, said Carol Russell Fischer, director of the Department of Revenue. Delaying tax refunds helps the state's situation in the short term, but with six percent interest due on payments after August 15, Fischer and Holden both said delays are not a solution.

"The refunds will go out," Holden said. "They may be a little slower but we'll get them out by the August deadline. That is an obligation that we as a state have made and we will fulfill that obligation."

Like other appropriations bills, including the budget for Fiscal Year 2003 beginning July 1, Missouri's constitution sets this Friday as the deadline for final passage of Russell's bill.