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House Budget Commitee approves spending cap measure

April 19, 2005
By: Chris Blank
State Capital Bureau

JEFFERSON CITY - Leadership in the Missouri House is pushing a proposed constitutional amendment to cap state spending.

Citing the failure of a constitutional amendment requiring voter approval of tax increases greater than $75 million to curtail state spending, Republican leaders said the amount of state dollars spent per year had to be constitutionally limited.

"What we have seen over the last 10 years is that you can never quench the thirst to grow government," said House Budget Committee Chairman Brad Lager, R-Maryville. "We will always have to find new measures to control that."

The House Budget Committee voted Tuesday to send the proposed cap to the House floor. The spending limit would be based upon the population increase and a weighted inflation index. Expanding medical costs would also receive extra consideration to compensate for medical costs increasing faster than the rate of inflation.

Lawmakers estimated the cap would hold budget increases to 4 percent to 6 percent. Exempted from the cap, voter approved tax increases would not count against the cap.

Although next year's budget has yet to finalized, it is slotted to grow at approximately 3 percent while the spending limit would have capped budget growth at just over 5 percent.

Revenue greater than the cap would be diverted to an emergency fund limited in size that would be used to prevent the midyear gubernatorial withholdings that have been used when incoming revenue is less than estimated. Overflow money from this fund would be refunded to taxpayers.

"Looking beyond the budget cap, I know that past budget discussions would have loved to have this reserve fund--and I'm thinking both Democrat and Republicans," Rep. Peter Myers, R-Sikeston, said. "This thing regulates growth. It doesn't stop it."

At the behest of then Gov. Bob Holden the House attempted to tap into a similar Rainy Day Fund to fill holes in 2002. But Rep. Ed Robb, R-Columbia, said the Rainy Day Fund, which requires the state to begin repayment the year after taping, has not been successful at curbing budget cuts because consecutive declining years would financially handcuff the state in the future.

The emergency fund the measure would create would give lawmakers five years before payments must begin.

Although none of the Democrats on the committee voted for the bill, the level of opposition varied greatly.

Rep. Barbara Fraser, D-St. Louis County, said she opposed the entire idea because it would hamstring future budget discussions.

"We are trying to act like prophets here and see the future with economic growth," he said. "But growth, like downturns, are often unexpected."

Several other Democrats on the committee said they supported the idea but needed several minor changes.

Rep. Jim Whorton, D-Trenton, said he believed the cap should be sunset after 6-10 years to permit future legislatures an opportunity for renewal if the cap works. Rep. Ed Wildberger, D-St. Joseph, said he believed the budget cuts to social services and education for the past several years should be renewed before turning to caps.

The proposal would need to be passed by the General Assembly and then by a majority of Missouri voters.

In other action, the Senate gave initial approval to a bill strengthening penalties against underage drinking and the penalties for those who provide alcohol to minors.

The House gave initial approval to a measure limiting punitive damages for uninsured motorists involved in traffic accidents and debated without a vote a measure to legalize midwifery.