JEFFERSON CITY - Facing the largest revenue decline in Missouri history, Gov. Jay Nixon cut an additional $126 million from the current budget Thursday.

Almost 60 percent of the money will come from Medicaid payments states are currently not required to pay to the federal government under increased federal match rates, according to a release from Budget Director Linda Luebbering.

The money from Medicaid payments is a "savings, not a cut in spending," Luebbering said. 

School transportation programs and the Public Safety Department's interoperability program were two of the largest cuts that made up the remaining $51.1 million.

School transportation programs have received a total cut of almost $20 million this year, roughly 11 percent of its original appropriation. Luebbering said this money comes from the state reimbursing school districts for expenses such as buses and maintenance.  It is at the school's discretion, Luebbering said, how to compensate for revenue lost from the state.

Luebbering also said that the governor's office is unsure about the fate of the interoperability program. Initially appropriated $87 million from the general revenue fund, the program has now taken cuts that amount to over $80 million. While some federal and highway money is still available for the program designed to facilitate communication between emergency responders, Luebbering said the governor's office has not decided if the program should continue in the current fiscal climate.

"We don't know if it makes sense to go forward," Luebbering said.

The state's operating budget also received a cut of $1 million, a cut that could result in lost jobs, Luebbering said. Although the cut could be offset with lessing operating expenses, she said, her speculation is that some positions will be lost. 

Revenue collections for fiscal year 2010, which began July 1, 2009, have declined 12.7 percent as of March 1, according to a release from the Office of Administration. A total of over $850 million in cuts have been made to the fiscal year 2010 budget since it was passed last May, according to the release.

The original fiscal year 2010 budget, initially based on higher than received 2009 revenue estimates, would have required collections to increase by 4.1 percent, Luebbering said.  A revised estimate, announced in January and accompanied by $55 million in cuts, expected a revenue decline of 6.4 percent.  The new cuts are based on an estimated decline of 9.6 percent in state revenue compared to 2009.

The governor's office is hoping this round of cuts will be the last, Luebbering said, but economic news keeps coming in lower than expected.

House Budget Chairman Allen Icet, R-St. Louis County, said the new estimate fits within economists projections of a decline between 8 to 11 percent. Icet, however, said he would not be surprised if another $100 million in cuts would still be required to balance the budget.

Before his budget office announced the cuts to the current year's budget, Nixon gave a speech in Springfield focusing on the Missouri's future financial situation.

According to copy of Nixon's speech, he thinks that $500 million will have to be cut from the current revenue estimate for next year's budget.

Jack Cardetti, a spokesman for Nixon, said the $500 million is a combination of $200 million in expected revenue decline and another $300 million that the original estimate had expected in federal money. The current version of the U.S. Senate's jobs bill does not include the expected funds.

Consolidating the departments of Higher and Elementary and Secondary Education into one department was one cost saving idea proposed by Nixon.

"We need to have one Department of Education that prepares students from the day they walk into pre-school to the day they walk across the stage with their college diplomas," Nixon said in a release.

Higher Education Commissioner Robert Stein said that interest is growing across the state and the nation for programs align elementary and higher education together.

Luebbering said that her office had not yet estimated exactly how much money could be saved by consolidating the programs but added the savings would come in the form of lower levels of administrative staff.

While the governor had not spoken to him about the program, Icet also said he could see the benefit of consolidating departments with similar functions.