Missouri's Second Injury Fund was once again declared insolvent Friday when the state auditor's office issued a report stating the fund does not have enough money to make up for unpaid obligations.

"The fund is currently insolvent, with unpaid liabilities totaling over $28.1 million, and no means to pay the benefits required by statute," according to the report issued by State Auditor Tom Schweich and his staff.

The fund had $3.1 million as of Dec. 31, 2012, leaving it with a deficit of $24.9 million. Schweich said it would take increasing the current 3 percent surcharge to 7 percent for one year and then be reduced to 5 percent in subsequent years to pay the fund's obligations.

The fund was created in 1943 to entice employers to hire workers with preexisting injuries, including veterans of World War II. It provides benefits to workers with preexisting injuries and covers any additional injuries these workers sustain while on the job. Money for the fund is produced by a surcharge placed on employers' workers' compensation insurance premiums.

The most recent report, as well as a 2007 audit, attribute the fund's insolvency to a 2005 law that capped the surcharge at 3 percent.

The report calls on the governor and General Assembly to "work together" to determine what to do with the fund.

Schweich said there are three ways state lawmakers could address the fund's insolvency: increase premiums to 7 percent, a combination of increasing premiums and reducing payouts, or eliminating the fund altogether.

Schweich said he and his staff conducted the report during the past month at the request of the attorney general's office, which is in charge of the overseeing the fund.

Missouri needs to decide whether or not to expand Medicaid to cover anyone under 133 percent of the federal poverty line instead of the current 18 percent mark for most adults.

The federal government would pay 100 percent of the financial burden imposed by Medicaid expansion for the first three years, but starting after the initial grace period, Missouri would start to become responsible for some of the cost.

Gov. Jay Nixon said Thursday that since elections are over, it's time for real debate about the issue.

"It was just are you for it or against it," Nixon said. "Elections are over, and now the depth of analysis that has to come to get to public policy decisions is beginning."

Senate President Pro Tem Tom Dempsey, R-St. Charles County, said the federal government cannot be trusted to keep its promise because of how much debt it is already in.

Nixon said Missourians would benefit by Medicaid expansion because they would get their taxes back.

"I think the Missourians that pay $1.8 billion of their taxes and send it to Washington are much more interested in those being expended here, in the Show-Me State, than they are to provide health care for folks in New York or California," Nixon said.

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Republican Lt. Gov. Peter Kinder has expressed interest in running for Missouri's 8th U.S. House District.

If he wins, he would leave the lieutenant governor's office, causing lawmakers to speculate on how the position would be filled. Democrats, including Gov. Jay Nixon, say the vacancy should be filled by a gubernatorial appointment, citing a section of the state Constitution that allows the governor to "fill all vacancies in public offices unless otherwise provided by law."

"The two times in recent history where that position has become open for reasons...the governor has appointed lieutenant governor," Nixon said Thursday, referencing two past instances where Missouri's governor has filled a vacancy in the lieutenant governor's office.

One such instance occurred in 2000 when Jean Carnahan was appointed as lieutenant governor after former Gov. Mel Carnahan's death.

Republicans, however, are citing a different section of state statute that seems to exempt a vacancy in the lieutenant governor's office from being filled by the governor.

On the opening day of the 2013 session both Senate President Pro Tem Tom Dempsey, R-St. Charles County, and House Speaker Tim Jones, R-Eureka, said they would prefer a special election should Kinder vacate the office. Dempsey and Jones also said that lawmakers need to work to clarify state statute regarding this issue.

House Minority Leader Jacob Hummel, D-St. Louis, said the only reason Republicans want a special election is because they think Nixon will appoint a fellow Democrat.

"If the governor was a Republican, I don't think we would even be having this discussion," Hummel said Wednesday.

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The Missouri General Assembly convened Wednesday for the first day of the 2013 legislative session, which goes until May 17.

Republican leadership in both the House and the Senate opened the session by promoting their priorities for the session, which focus around education funding and economic development.

Senate President Pro Tem Tom Dempsey, R-St. Charles, used the acronym BIG to summarize his overall objective during this session. This includes building infrastructure, investing in technology, and growing the economy.

Dempsey said improving infrastructure, such as the state's transportation system, would bring more revenue to the state.

"As you look at us geographically on a map -- Missouri being in the center of the country -- we should be a hub for the movement of goods and services and we need to have an infrastructure system that can handle that activity," Dempsey said.

The House agenda, presented by Speaker Tim Jones, R-St. Louis, largely echoed Dempsey's proposals. While Jones agreed with Dempsey that the 97th General Assembly should work on economic development and education funding, he also included improving Missouri's energy policy as a legislative priority.

Dempsey and Jones both said lowering income taxes and fostering a pro-business environment would be a better method to grow the economy instead of raising taxes. Both of the Republican leaders said they wanted to address the state's workers' compensation laws and 61 tax credit programs.

"We're going to be looking to create jobs as best we can," Jones said. "Government will not create them, but the government will look at what it can do to facilitate that and to remove barriers to innovation and reform."

Republicans hold 24 of 34 Senate seats and 109 of 163 House seats, giving them veto-proof majorities in both chambers. Two seats in the House are currently vacant.

Missouri Secretary of State Robin Carnahan presided of the House for the last time. Jason Kander, a former state representative, will replace Carnahan as Secretary of State during the state's inauguration on Monday.

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