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Silver lining to Missouri budget cloud, official says

January 15, 2002
By: Nicholas Rummell
State Capital Bureau

JEFFERSON CITY - After all the talk of budgetary gloom, the state's top budget official gave the Missouri Senate a bit more rosy forecast for the future at an informal briefing Tuesday.

According to the Division of Budget and Planning, the state economy is estimated to see an increase in the rate of growth in 2003.

General revenue in Missouri is projected to increase by $150 million from the 2002 fiscal year. If accurate, this could mean a 2.3 percent positive rate of growth from 2002 to 2003.

However, the state isn't out of the woods yet, state officials said.

Budget and Planning Director Brian Long said that these figures, while positive, are not staggering and should not be treated as a panacea to Missouri's economic woes.

"In 2003, Missouri will return to a more normal level of activity," said Long. "But it will, by no means, be returning to the era of the mid- and late-1990s."

Missouri was officially deemed in a recession in late 2001, and revenue collections for 2002 were projected to be $35 million less than last year.

"Missouri's economy typically follows the nation's lead," said Long.

Long attributed the revenue decrease mostly to weakening individual income taxes during 2002 -- which represent 62 percent of general revenue collections -- along with higher unemployment and slow salary growth.

Individual income tax is forecasted to strengthen during 2003, but not to what it was in past years, Long expects. Unemployment, however, will peak in the first half of 2003 and will probably stay high during the second half.

"The first six months of 2003 will be bad," said Long.

While Gov. Holden has made it plain that the budget will see a slew of withholdings and shifting funds, it is still unclear where those cuts in expenditures will be made.

Mandatory programs, considered untouchable for the purpose of withholding funds, could be manipulated to allow less funds to be allocated to them.

Sen. Ken Jacob, D-Columbia, questioned suggestions to raise the age for people to be eligible for Medicaid, traditionally a mandatory state program.

"How many people would we have to knock off the Medicaid roles to balance it out?" he asked. "At what age would this occur?"

The first thing to address, said Long, would be to take the $536 million withheld by Holden this past fall and put it into core budget cuts.

"Then we could get back to zero," said Long.

The next fiscal year begins July 1.