JEFFERSON CITY - Missouri's emergency reserve funds would be consolidated and more strongly controlled under a constitutional amendment on the November ballot.
The fund is used for emergencies or when there is an unexpected drop in tax collections that leaves state government short of cash.
State Budget Director Mark Ward said the fund was important to Missouri taxpayers because it would protect state services from mid-year cuts in the event of an economic downturn.
"There is actually a heavier demand for those services if there is an economic downturn," he said.
Sen. Larry Rohrbach, R-California, sponsored unopposed proposal. It cleared the legislature without opposition. Rohrbach said his approach makes more sense than the traditional way it has been handled.
"It can help change the cycle where when the economy goes up and money goes up, we lower taxes, but when the economy goes down and the money goes down we raise taxes trying to maintain the level," Rohrbach said. "That's sort of backwards."
The new general reserve fund would combine the state's two current reserve funds and maintain about $420 million in what government calls a "rainy day account." Two-thirds of both legislative chambers would have to approve using the account's money.
The money would initially come from the current balances of the cash operating reserve fund and the budget stabilization fund. The cash operating reserve fund now has about $280 million and is used to ensure that the state pays its bills on time even in slow revenue collection months.
The budget stabilization fund is more like a savings account and currently has a balance of $140 million. Similar to the budget reserve fund, the stabilization account is reserved for emergencies and has only been accessed once, when the state used $16 million during the 1993 floods.
If the legislature votes to access the fund, only half of the money in the account could be spent at any one time. All money would have to be repaid within three years.
The creation of the general reserve fund is on the ballot because it is a constitutional amendment.