Insolvency to Surpluses: The Facts about Missouri’s Budget

By Missouri Gov. Matt Blunt

The St. Louis Post-Dispatch recently stressed the importance of understanding the state budget.  They should follow their own advice.

Missourians deserve to know the facts about the state budget.

The budget we inherited after years of liberal control in Jefferson City was an insolvent wreck, with a deficit of $1.1 billion. The budget my successor will receive is balanced, with a surplus.  This is an established fact.  Even liberal politicians acknowledge the surplus when they announce unsustainable plans to spend it on bigger government. It is regrettable that the newspaper is in denial about the dramatic improvement in Missouri’s budget.

In many states, the budget is in shambles. In Missouri the opposite is true. The National Conference of State Legislatures (NCSL) reported that 30 states face significant budget problems.  Here, we are fiscally fit, with revenue growth, ongoing savings from management and program changes, no new taxes, and large increases in funding for education.  NCSL reported that Missouri is among only 13 states with a stable or optimistic revenue outlook for 2009.

Our 2008 budget just posted the third consecutive surplus of my administration, with an ending cash balance of $833 million. As The Associated Press noted, this is Missouri’s strongest surplus in at least 20 years.  Further, the rainy day fund for emergencies has grown from $463.3 million to $557.3 million since 2005.

Other newspapers have praised the responsible stewardship that rescued Missouri’s budget from insolvency. It is against the Post-Dispatch’s editorial beliefs that it is possible to balance the budget, increase education spending, provide medical care for those in genuine need, and meet the state’s other responsibilities, all without raising taxes. It is possible to do this. It is what our Administration just did.

In January 2005, I inherited a budget that included a $1.1 billion deficit. The budget had spending of nearly $7.13 billion, against revenues of only $6.98 billion, leaving us $148 million short in our operating budget.  Additionally, the deficit included $790 million in mandatory spending that would have been necessary to sustain the old way of doing business and more than $68 million for other required payments.  The deficit was not a list of suggestions as the Post-Dispatch asserted.  For example, it included $460 million to pay for the growth of the old Medicaid system – a system attempting to provide public assistance to more than one out of every six Missourians and failing to even verify the eligibility for nearly a third of those who signed up.

On March 6, 2005, the newspaper presented its editorial remedy for the budget wreck.  They suggested I propose a tax increase.  We did not raise taxes.  Instead, we cut taxes, three times.  We made difficult decisions to control spending. We overhauled state government to produce savings and greater efficiency in the use of taxpayer dollars.

We reduced the number of state employees to below 60,000 for the first time in years. We proved wrong those who “knew” it was impossible to achieve financial stability without job-killing new taxes.

The editorial further misled readers about education by selecting 2001 as a funding baseline. Records will show I became Governor in 2005. The assertion that my administration increased elementary and secondary education by only 4.85 percent “more than in 2001” is extremely misleading.  Working with the General Assembly we have increased K-12 funding by 17.2 percent or $440 million.

As with K-12, the editorial used 2001 data to mislead readers about higher education.  Higher education funding in 2001 was $960.4 million. The next administration then cut this by $98 million, or 10.2 percent.  My administration increased funding for colleges, universities and students by $166.5 million, or 19.3 percent, to more than $1 billion, the largest ever higher education budget and the first to exceed $1 billion.

This does not include the additional $335.3 million we provided to higher education through the Lewis and Clark Discovery Initiative. Thus, the total infusion of new funding for higher education during my term has been more than a half billion dollars.

The tax relief we provided to taxpayers was directed primarily to seniors, military veterans, health care and manufacturing jobs. But the editorial implied that these “lost” revenues would be reductions in future budgets. In fact, they are incorporated into our budget projections. The newspaper’s error has the effect of double-counting the impact of tax relief. I do not view a tax reduction as taking money “away from” the government, or as a “loss” to the government. Tax relief is returning taxpayer money to taxpayers. We need to do more of this, not less of it.

I hope that my successor shares my principles of good government. If Missouri follows the lead of liberals with radical proposals to dramatically increase welfare spending, the surplus might be sustainable for a few years, but this will eventually drive the state to either bankruptcy or a tax increase.  If we continue on the path of fiscal responsibility, Missouri’s budget will remain strong and we will avoid the budget collapses that other states are experiencing because they failed to rein in spending.

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