By Bob Holden
Now that the elections are over, inaugural celebrations are taking place and the winning candidates are in the process of taking their new place as our representatives, it must be made clear that every single issue is framed in terms of the “dollar cost” or “budget priority” -- from education and corrections, to transportation and healthcare. Not only does the budget span issues, it affects all dimensions of government on the local, state and national level.
One key difference in dealing with state and federal budgets is that state constitutions require a balanced operating budget; the federal government, on the other hand, has the authority to print money. Meeting this requirement of a balanced budget and keeping up an adequate level of state services will be a huge challenge for Governor Nixon and the new Missouri General Assembly.
Of the state budget, 85 percent of all general revenue is tied up in existing programs for education, healthcare and corrections. Therefore, if you need to make cuts in spending you have three options. The first option is that funds can come out of these three critical areas: education, healthcare or corrections, which all work on a limited budget to begin with. Your second option is that you can raise additional revenue (tax increases), not always a popular move for a newly elected official. Your third option is to hope that the President can help states with additional funding from the federal level. As most states face budget problems as difficult as, or worse than, those upcoming in Missouri, it can be expected that the Federal government will come to the aid of states with enhanced federal match for the Medicaid program and additional spending for highways and other infrastructure. The Federal government can also ensure that unemployment benefits and other safety net type spending remains adequate.
At the state level, the budget discussion will focus on staggering numbers. It now appears likely that the state will face a budget shortfall in the $300 to $400 million range in FY 2009. As most leading economic forecasters expect a weak national economy well into this year, the Missouri budget outlook for FY 2010 is even more unsettling.
Being educated on the issues is just one side of the coin. At the Holden Public Policy Forum @ Webster University we invite the movers and shakers from across Missouri and in Washington, D.C., to discuss these exact issues. I would like to extend an invitation to each and every one of you to participate in these open dialogues (
www.webster.edu/holdenppf). By starting this dialogue in January, we can have an ongoing conversation that results in leaders, such as yourselves, emailing and calling the right people at the right time to really make a difference in where the money goes, whatever view you happen to take.
Bob Holden served as governor of the State of Missouri from 2001-2005.