Nixon's proposed budget to rely on $800 million from federal stimulus package

JEFFERSON CITY - Missouri's 2010 fiscal year budget would be balanced with more than $800 million in federal economic stimulus funds under the plan Gov. Jay Nixon presented to legislators Tuesday night.

In addition to highlighting several job creation efforts, health care proposals and education recommendations, Nixon said 1,300 state government positions will be cut, 50 state programs will be reduced or eliminated and funds from a federal stimulus package are necessary for the budget to be balanced.

"We have every reason to believe that a federal recovery package will soon be passed by Congress, and money will be sent to the states to help create economic growth," Nixon said in his address. "We've been working closely with the Obama administration and our Congressional delegation on this matter. And I have established an Economic Stimulus Coordination Council to ensure that Missouri is prepared to wisely invest the assistance that comes from Washington."

Congress has yet to take final action on the bailout package. Although Republican budget leaders said the $809 million figure was in the ballpark for what the state can expect, they questioned how the governor proposed using the money.

Both House Budget Committee Chairman Allen Icet and Senate Appropriations Committee Chairman Gary Nodler said the funds should be limited to one-time expenditures -- not built into the core of the budget since there is no guarantee Congress would continue the state support in future years.

The Republican House Speaker, Ron Richard, was even more blunt in his criticism.

"2010 -- we're still operating on a check card, a credit card, hoping for $800 million from the Fed," Richard said. "I'm not sure that'll -- we hope it'll come. We'll see. We've got to balance a budget, so I'm not going to count on dollars that we don't have."

In a pre-speech budget briefing with the press, Nixon's deputy counsel Paul Wilson justified the risks involved in including the federal stimulus package. He said that, if the state did not take advantage of a package that Congress might pass, "We'll have missed a tremendous opportunity."

Wilson and Budget Director Linda Luebbering emphasized that any funds from the federal government would be spent on investing and turning the state economy around, as well as plugging holes in revenue collections.

Another component of Nixon's budget proposal is the reduction of state government positions and programs. In the pre-speech budget briefing, Wilson and Luebbering said 1,329 government positions will be cut and 50 programs will be reduced or removed by July 1 -- the first day of fiscal year 2010. According to the budget briefing, these cuts would save $292 million in the next fiscal year.

"We are proposing the smallest state bureaucracy that Missouri has seen in a decade," Nixon said in his address. "The reduction I am proposing today represents the largest single reduction in the state's bureaucracy in modern history."

It was with a catch in his voice that Nixon described the employment scale-back that his staff said will involve laying off state government workers: "Make no mistake, I value our state workers and these cuts will not be easy. We must always remember that public service is among the most honorable lines of work."

His budget staff said they did not yet have an estimate as to how many of the 1,300 jobs would be eliminated by layoffs and how many by not filling existing vacancies.

Nixon announced he will create a Taxpayer Protection Commission, which would evaluate all government agencies and departments "to identify what's working and what's not working, what could be run more efficiently and where we can consolidate."

In the formal Republican response to Nixon's address, Lt. Gov. Peter Kinder questioned the confidence with which Nixon based his proposed budget on federal funds.

"What if these dollars don't arrive?" Kinder asked. "What if we don't get nearly as much as expected? Can we really spend our way back to prosperity? Then our entire budget would have been written on a bad check. A budget based on a one-time bailout is no long-term plan. We need an enduring vision for our state's economy."

Kinder, the only Republican elected to statewide office, also said that if Missouri does receive federal stimulus dollars, Republican legislators would make sure that Nixon uses the funds appropriately and effectively.

Richard, R-Joplin, said Nixon gave a good speech. Richard also said that while he approved of Nixon's discussion of job creation and education, he does not agree wholeheartedly about the role a federal stimulus package would play in the governor's proposed state budget.

When asked if, should federal assistance not arrive, he has a "doomsday scenario" in mind, Richard skirted the question.

"I mean, there is momentum in Washington, D.C., to do this," Richard said. "Let's keep an open mind. The governor -- let's give him respect. He has a plan; let's look at it. We'll work with him when we can, and when we can't, we'll offer alternatives."

Senate President Pro Tem Charlie Shields, R-St. Joseph, also said he liked what Nixon said about job creation. But Shields said he thinks the use of unauthorized stimulus money in balancing the state budget is imprudent.

"To have a speculative budget is not acceptable," Shields said. "That would require the construction of a sound, balanced core budget underlying the larger budget that would include the federal stimulus requests.

"The question was whether it's prudent to do things like expanding health care coverage with federal stimulus dollars," Shields said. "Of course that's not acceptable, because that would be a use of one-time money for ongoing core demands."

The House budget leader, Icet, called the reliance on such funds "simply bad budgeting."

"You're setting the state up for a financial disaster sooner or later," Icet said. "As I said, I haven't had a chance to even look at the details, so I have no idea what's in there, what the proposals are. But just at first blush, if I understand what the governor's doing, I have some real concerns about balancing a budget."

Icet said Nixon's decision to include the federal stimulus package in his budget proposal did not come as a surprise.

"I was wondering, given the hole he has to fill this year, how he was actually going to do that," Icet said. "I told some of my colleagues, 'He may use that federal money to balance the budget,' which again I simply did not believe was prudent."

But in the interest of bipartisan communication, Richard said he is willing to listen to what Nixon has in mind.

"Let's give the guy a break, and let's see what he has in mind first before we criticize it," Richard said. "We'll keep an open mind, and let's take a look at it. I'm willing to give the guy a break."