A bill restricting employee lawsuits vetoed by the governor last year has been put at the top of the Senate's agenda for the 2012 legislative.

The measure is one of the first three bills reported out of committee for full Senate debate.

The proposal, strongly backed by business organizations, would impose restrictions on discrimination lawsuits by fired workers. It would require an employee to prove that discrimination was the reason for termination. The measure also would impose limits on discrimination lawsuit awards.

"Missouri has made itself an island among Midwestern states for jackpot discrimination payouts," said Missouri Chamber of Commerce President Dan Mehan.

In his veto letter of a similar bill in 2011, Gov. Jay Nixon charged the measure was "a significant retreat from the basic principles of fairness embodied in the Missouri Human Rights Act and erects unacceptable impediments to those victimized by discrimination."

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The new congressional districts came under fire Thursday as the Missouri Supreme Court considered a challenge to the new district lines.

The state's high court heard oral arguments questioning the legality of the districts drawn last year by the Missouri General Assembly. The newly drawn map essentially eliminated the district currently held by US Democratic Rep. Russ Carnahan after Missouri's population grew at a slower rate compared to the rest of the nation.

The Missouri Constitution requires that congressional districts must be "composed of contiguous territory as compact and as nearly equal in population as may be." Attorney Gerry Greiman represented those challenging the new map and told the Supreme Court the new districts are not "compact" and were drawn for the benefit of the Republican party.

"The deliberate skewing of the electoral playing field for partisan advantage is precisely what the plaintiffs allege here," Greiman said.

But Solicitor General James Layton for the Attorney General, however, argued that politics does play a role in shaping congressional districts.

"It has always been about more than population and compactness," Layton said.

Political priorities were not the only argument the Supreme Court heard. Layton defended the new districts and said there was no standard to define the "compact" districts required by the Constitution. Attorney Edward Greim represented the General Assembly in court and said the standards for districts the plaintiffs wanted were impossible.

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Missouri's public universities would be required to accept transfer credit from sister institutions under a plan presented Wednesday in the Senate Education Committee.

As part of an effort to boost college graduation rates, Education Committee Chairman Sen. David Pearce, R-Warrensburg, presented the measure, which would create a "transfer library" of 25 courses that would count toward a student's degree at all public colleges in Missouri.

Pearce said this and other provisions in the bill are aimed at keeping students in college to earn their degree instead of dropping out after a few years.

"We have students show up as freshman and leave by the time they are a sophomore," Pearce said.

The bill could also help boost Missouri's percentage of people with college degrees, which is currently hovering just below the nations average. Commissioner for Higher Education Dr. David Russell pointed out that only 25 percent of our current third graders will get a college degree.

"It is an unfortunate waste of human capital," Russell said.

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Future state spending would be capped under a measure passed by the House Budget Committee Wednesday.

Rep. Eric Burlison, R-Springfield, sponsored the constitutional amendment, which if approved by Missouri voters would freezing spending levels on Missouri's budget for general revenue funds. Burlison's amendment caps future spending to 2008 budget levels when state revenue was $8 billion with future increases allowed based only on inflation and population growth.

Former House Budget Chair Rep. Allen Icet, R-St. Louis County, returned to Jefferson City to support the bill arguing it will help prevent the uncertainty in the state budget.

"When the state of Missouri has good years from a revenue standpoint that there is a limitation put in place so that the General Assembly simply cannot spend every dime knowing full well if nothing else that is simply not sustainable," Icet said.  

Under the amendment, Any additional revenue collected beyond the $8 billion mark would first be diverted to pay off public debt owed by the state and then into emergency cash reserve funds. Burlison said his bill would provide stability to the state during uncertain economic times.

"It tries to make it a more stable environment and making sure that we reduce the boom and bust years that we experience," Burlison said.

Democrats and some Republicans expressed concerns about the measure, arguing it makes spending on education and healthcare more difficult.

"Vote against this for the sake of our kids, education and the elderly," Rep. Jamillah Nasheed, D-St. Louis City, said.

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A Senate committee heard testimony Tuesday on a bill, which would prevent Gov. Nixon's administration from creating a health exchange without the approval of Missouri voters.

The health exchange would establish a website where consumers would be able to compare insurance company's rates before purchasing a plan. The bill sponsored by Sen. Rob Schaaf, R-St. Joseph, prevents the state executive branch from establishing such an exchange as mandated by the Patient Protection and Affordable Care Act, more commonly known as "Obamacare."

"This bill is needed because the governor has already tried to create a health insurance exchange by executive order ... this shouldn't be allowed to happen. This is the purview of the Legislature, not the governor," Schaaf said.

Schaaf's bill stems from a conflict last September where the Missouri Health Insurance Pool (MHIP) got a $21 million from a federal grant to lay the groundwork for the exchange. Lawmakers were irate when they were not consulted on the move.

Alan LeDodge, a retired United Methodist Pastor, testified against the bill, saying Missouri needed the federal grant money, "so that our state agencies can upgrade their computer systems, make them more effective, make them more usable, make the job of our employees in the state work more effectively and more effectively respond to the needs of our people."

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Lawmakers heard testimony on how the mechanism to fund school districts is broken.

Legislators heard testimony Tuesday on how the current approach to funding local districts harms certain schools in the event that education is not fully funded. The schools most affected under the current system are known as "hold-harmless" which essentially means their funding cannot be cut.

School districts have not been fully funded since 2009, a trend expected to continue for the next fiscal year. Since 2009, all school districts have lost funds even though about 150 of them are "hold-harmless" and are funded differently than the rest.  

Rep. Mike Thomson, R-Maryville, and Sen. David Pearce, R-Warrensburg, have filed bills in the House and Senate, respectively, to fix the problem and address budget shortfalls in the future.

"There is nothing now to say how a $300 million shortage is going to be distributed among the schools," said Thomson, a former school administrator and Chairman of the Joint Education Committee. 

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State revenue collections dropped more than two percent last month compared to December 2010 according to the General Revenue report released Thursday.

The 2.1 percent drop is unwelcome news to a General Assembly already faced with a budget shortfall of nearly $455 million from the last fiscal year. State Budget Director Linda Luebbering described the revenue report with one word -- "bad."

Overall, year-to-date General Revenue collections saw a 1.2 percent gain compared to the last fiscal year. The gain, however, is still small compared to the estimated 3.6 percent revenue growth for fiscal year 2012 projected by top budget officials a year ago.

The hardest hit revenue area in 2011 was in corporate income tax receipts, which dipped 10.5 percent for the month of December. Sales tax receipts also dipped 4 percent last month despite the Christmas holiday shopping season.

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State agencies and Gov. Nixon would no longer be able to spend money outside the normal budget process if a top budget official is successful in eliminating the General Assembly's practice of granting that power.

Budget Chair Ryan Silvey, R-Kansas City, has said he plans on eliminating the General Assembly's practice of placing a "1E" on specific budget line items, which allows the governor and other state agencies to spend an unspecified amount of money on particular budget lines.

"It is unlikely there will be '1E' anywhere in this state's budget," Silvey said.

State Budget Director Linda Luebbering said she had some major concerns regarding Silvey's plan to eliminate the "1E" from the state budget. Her top concern focused on disaster relief, the same topic that has led to the proposed change.

"If that "1E" goes away and they don't put a very large number to replace it, we would be in jeopardy of not having the budgetary authority to do what we need to do to help communities recover," Luebbering said.

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In opening-day addresses on Wednesday, the top leaders of Missouri's House and Senate cited similar issues as top priorities for lawmakers to resolve in the legislative session that will run until mid-May.

Both Senate President Pro Tem Rob Mayer and House Speaker Steve Tilley stressed bi-partisan cooperation in their opening-day remarks.

"In seven years, I've done my best to foster bi-partisanship," Tilley told his colleagues. "When I go back to private life, my fondest memories will not be the bills I help pass or even the fights we won on the floor. Instead, it will be the moments of friendship I shared with both Republicans and Democrats, both House members and Senate members."

On the Senate side, Republican Mayer had the Senate's Democratic leader, Victor Callahan, join Republican leaders in the pre-session news conference.

Both Mayer and Tilley are serving their final year in their chambers -- blocked by term limits from seeking re-election.

The one note of partisan disagreement came on the Republican leaders' push for swift passage of a pro-business agenda.

"You're not going to bring back prosperity by lowering the middle class's wages and taking away their rights," Callahan said.

Also cited by legislative leaders as priority issues was balancing a budget that is facing nearly $500 million in federal funding reductions and dealing with the unaccredited schools in St. Louis and Kansas City.

"we must also address the revolving door of drop outs and failed policies in our state's two largest school districts," Mayer said in his Senate address." Both have a decades-old cycle of failing their students."

The top leaders of Missouri's legislature cited education funding as the "must-pass" issue for the 2012 session that begins Wednesday at noon.

"I've been here eight years and every year that we try to fix the broken schools with a different idea and all you hear is 'no.' And what ends up happening is that we get the status quo and we shuffle thousands of kids through failing schools," said House Speaker Steve Tilley.

Facing the state lawmakers is a funding problem with legal formula, called the School Foundation Formula, that allocate funds among local school districts.

The goal of the formula, to equalize per-student spending among school district, has failed because the state has been unable to sustain the level of funding increases required to achieve that goal.

Past efforts to fix the formula have run into opposition from legislators from some richer districts that would suffer state-funding reductions in order to shift money to poorer districts.

A group of lawmakers has been working in crafting a new approach. However Senate President Pro Tem Rob Mayer conceded that some opposition remained in his chamber's GOP caucus.

In addition to the funding formula problem, lawmakers face the problem of Kansas City joining St. Louis with school districts that have been stripped of state accreditation. Under state law, children in those districts have the right to attend schools in any other district -- an issue that has raised concerns from St. Louis County school districts.

The legislature's regular session begins just a few months after lawmakers failed in the summer special session to pass the governor's package of business tax breaks for economic development.

Mayer said that failure has created an incentive for the regular session. "A lot of legislators, including myself, were disappointed that we didn't get done what we wanted to during special session and that gives us the incentive to get some things done in this new session," Mayer said

Besides education, the state's budget will present a major challenge for state lawmakers. State officials estimate there will be a shortfall of $500 million or more for the budget year that will begin July 1.

For the last few years, the state has been balancing its budget with federal economic recovery money that has been used up. In addition, the federal government is lowering the share of funding it picks up for Medicaid that covers health care costs for the lower income. The federal government also has restricted states from making cuts in the program.

Legislative budget leaders have warned that higher education likely will suffer the brunt of the resulting budget cuts. In December, Gov. Jay Nixon's administration floated the idea of borrowing money from the state's larger universities to cover the budget shortfall. The idea quickly was rejected by legislative budget leaders.

Nixon is scheduled to present his budget plan to lawmakers in Jan. 17. The legislative session adjourns in mid-May.

Missouri's major business organizations presented a relatively small package of proposals on the eve of the legislature's regular session.

At a Tuesday news conference, the organizations presented three proposals -- none involving business tax breaks that had been pushed during the legislature's special session.

Instead, the proposals deal with other financial concerns of business -- imposing restrictions on discrimination lawsuits against business, imposing limitations on liability lawsuits against business and reversing a couple of court decisions expanding coverage for workers injured on the job.

"This is not a wish-list," said Missouri Chamber of Commerce President Dan Mehan. "We are putting Missouri jobs and Missouri workers at risk if we don't address these issues now."

The legislature had passed a discrimination lawsuit restriction bill in 2011, but it was vetoed by the governor.

In his veto letter, Nixon charged the bill "represents a significant retreat from the basic principles of fairness embodied in the Missouri Human Rights Act and erects unacceptable impediments to those victimized by discrimination and seeking to avail themselves of the Act's legal protection."

• Get the 2011 bill, SB 188.