From Missouri Digital News: https://mdn.org

®RM75¯®FC¯®MDBO¯COL236.PRB - Unheeded Budget Warnings®MDNM¯ ®FL¯ By Phill Brooks As legislators begin the arduous task crafting next fiscal year's multi-billion dollar budget for state government, they are facing an historic challenge. Revenue shortfalls have forced the governor to propose some of the deepest spending cuts I can remember. It's not a surprise. For decades there have been warnings that the state was heading for a financial train wreck. Only a few years after Missouri voters approved the Hancock Amendment in 1980 to impose tax limits, a warning was sounded that Missouri's tax base eventually could not support existing government services. The prediction came from a former state budget director and commissioner of the Office of Administration. Jim Moody is no left-wing, tax-and-spend liberal. He served under a Republican administration before becoming a leading lobbyist whose client list included major businesses. He was not arguing for higher taxes. Restructure government programs to reflect the future fiscal reality was an alternative. But Moody's warnings fell on deaf ears. One of the first signs of the truth of Moody's analysis came only a few years later when mandatory Medicaid increases began eating an increasing hole in the state's budget. Republican Gov. John Ashcroft warned about budget threats from the rising costs of Medicaid that provides health care coverage for the lower income. A later successor, Republican Matt Blunt, responded with deep cuts in the program. But they were one-time cuts that did not fundamentally restructure the program nor slow its growth. Continually rising Medicaid spending is the reason why the largest General Revenue budget increase proposed for a state department by Gov. Eric Greitens this year is for the Social Services Department which handles Medicaid. Almost half, 41 percent, of the state's estimated entire General Revenue growth for the next budget year will go to Medicaid under the governor's plan. The budget pressures caused by Medicaid should not come as a surprise to anyone who had been listening to the Senate the last few years. Former Senate Appropriations Committee Chair Kurt Schaefer, R-Columbia, had been warning that unless structural changes were made to Medicaid, legally mandated increases would strip the state's ability to fund increases in other programs like education. While Medicaid continues to grow, tax collections have not kept pace. In the past decade, GR spending by the Medicaid division has grown at twice the rate as General Revenue collections. The recent stagnant growth in tax collections should not have come as a surprise to legislators. In 2011 when the legislature approved phasing out the corporate franchise tax, legislative staff predicted in the bill's "fiscal note" that it ultimately would cost the state more than $88 million in lost tax revenue in 2016 when the tax was completely eliminated. Sure enough, for the current 2016-2017 budget year, the governor's budget predicts the state will collect $97 million less in corporate taxes than the prior year and $166 million less than in 2011, the last year before the franchise tax began to be phased out. Former Gov. Jay Nixon signed that tax-cut bill, but he took on a larger tax-loss issue -- tax credits that cost the state well above $300 million each year. But with so many popular causes and special interests benefiting from the tax breaks, efforts to restrict tax credits have languished in the legislature. Tax credits reward businesses and developers. They benefit popular causes like elderly home owners, historic preservation projects and low income housing. Among the possible reasons for this history of unheeded budget warnings, legislative term limits strike me as a major factor. Lawmakers simply have too little time in office to craft solutions to complicated issues and then build the coalitions to assure passage. On the spending side, proposals like consolidating school districts, restructuring Medicaid, regulating prescription drug costs and placing competing higher education institutions under a single board involve complex structural issues that would require years of effort to overcome the pressures against change. 

[Phill Brooks has been a Missouri statehouse reporter since 1970, making him dean of the statehouse press corps. He is the statehouse correspondent for KMOX Radio, director of MDN and an emeritus faculty member of the Missouri School of Journalism. He has covered every governor since the late Warren Hearnes.]

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