Missouri Budget Overstates Revenues By Up To $1 billion; Indiana Revenue Falls Short; Budget Battles In Washington; Budget Gaps In Kansas

Budget news from state after state is grim. When will this matter? No one knows but service cutbacks are coming, as are huge layoffs.

Missouri Budget Overstates Revenues By Up To $1 billion

The Kansas City Star is reporting Nixon's budget may have overestimated Missouri revenues by up to $1 billion

The state budget presented six weeks ago by Missouri Gov. Jay Nixon may have overestimated revenues by as much as $1 billion, lawmakers warned Tuesday.

The stunning deficit could force lawmakers to go beyond program and service cuts to consider major structural changes to state government.

“It is clear that even as Missouri’s economy begins to rebound, state revenues will continue to lag for a prolonged period of time,” Nixon, a Democrat, said in a statement Monday. “As a result, we will need to downsize the scope of state government, while protecting necessary services to the citizens of Missouri.”

That announcement was underscored Tuesday by the release of state revenues for February, which showed a year-to-date decline of 12.7 percent compared with this time last year, and a 14.6 percent drop in revenues for February.

The budget Nixon presented to lawmakers in January totaled $23.8 billion, of which $7.2 billion came from the state’s general revenue fund, largely made up of tax revenues. The shortfall being discussed could represent 10 percent — or more — of the $7.2 billion that the General Assembly controls.

“This is a crisis in the state budget that we have never, ever seen before in the state of Missouri,” said Sen. Kurt Schaefer, a Columbia Republican and vice chairman of the Appropriations Committee.

Year-over-year revenues have never declined as they have since 2008, said Schaefer, who added that it was a fiscal reality that would require a new approach to balancing the budget.

“We are way beyond cutting a few hundred thousand here, a few hundred thousand there,” Schaefer said. “This is a whole-scale restructuring that’s going to have to occur.”

Just what that restructuring will look like — and what departments, programs and services might be affected — is still unclear.

Dear Governor Nixon, please give New Jersey Governor Chris Christie a call. He has some ideas for you.

Budget Battles In Washington

The Olympian is reporting Republicans eye state workers’ pay

Republicans in Olympia say they have an alternative to raising taxes: slash compensation for state workers.

The minority party has demanded that Gov. Chris Gregoire or the Legislature bring employee unions back to the bargaining table. The contracts that run through 2011 would have to be renegotiated before lawmakers could tamper with pay or benefits.

“I don’t think we’ve asked them to give up much at all,” Sen. Joe Zarelli, the top Republican on the Senate budget-writing committee, said of state employees.

It’s unclear, however, how going back to negotiations would persuade workers to give up anything.

Unions such as the Washington Federation of State Employees have ruled out changes, pressing the Legislature to raise tax revenues to fill a $2.8 billion shortfall.
Republicans eye state workers' pay

Dear Governor Gregoire, stop being a union patsy at the expense of the majority of your constituents. Please give New Jersey Governor Chris Christie a call. He has some ideas for you.

Budget Gaps In Kansas

The Kansas City Business Journal is reporting Parkinson adjusts Kansas budget to cover $106M gap

Gov. Mark Parkinson has made additional budget adjustments to bridge a $106 million budget imbalance in the current fiscal year in light of continuing revenue declines.

Parkinson also criticized the Legislature for going on a “tax-cutting binge” to the tune of $9 billion that benefits special interest groups and not the average Kansan.

“It’s not just the recession that has put us into this current situation,” Parkinson said.

Specifically, Parkinson cited the elimination of estate taxes and franchise taxes and a tripling in the number of sales tax exemptions in recent years.

Dear Governor Parkinson, stop being a socialist fool. Citizens are taxed enough. Please give New Jersey Governor Chris Christie a call. He has some better ideas for you.

17 Consecutive Bad Months In Indiana

The Courier Press is reporting Indiana receipts again fall short of projections

Indiana has now had 17 consecutive months of bad fiscal news.

A new revenue report on Tuesday showed that Indiana took in $85.5 million less in tax dollars in February than was predicted less than three months ago.

That puts the state $869 million below what lawmakers expected when they passed the budget for the fiscal period beginning in July, and $113 million below what they hoped for when that projection was scrapped in favor of a new one in December.

Gov. Mitch Daniels did not immediately order any budget cuts, but since it’s been 17 months since actual revenues met projections, he said further spending reductions might be necessary if revenues continue to sag.

“We’ll just have to keep looking at it. There’s not a state in the union that’s done as much as we have, and we’re not out of tricks yet,” Daniels said.

Dear Governor Daniels, stop looking and start acting. Wikipedia says you are "widely cited as a rising star within the Republican party." Rising stars don't sit and twiddle their thumbs or look for tricks to solve budget problems. Silly Wabbit, Tricks Are For Kids. Please give New Jersey Governor Chris Christie a call. He has some genuine ideas for you.

Time For Action, Not Looking

In case you missed it, New Jersey Governor Chris Christie laid it on the line in a speech to about 200 mayors at the New Jersey League of Municipalities.

Chris Christie Actions

• He froze aid to schools
• Challenged school boards.
• Wants to change arbitration rules for public workers
• Requests public-private salary and benefits parity
• Demands pension reform
• Property tax hikes not an option
  
• Wants to get rid of programs like COAH
• Is not thinking about the next election

Please see Governor Christie: "Time to Hold Hands and Jump Off the Cliff" - Chris Christie For President for an amazingly candid appraisal of the sorry state of affairs in New Jersey.

His speech is a model for governors across the country. We don't need union apologists, socialist fools, or magicians running state governorships. We need leaders willing to lay it on the line with decisive ideas coupled with action.

Reckless government spending, not a recession is what caused this mess. The recession just made the problem noticeable sooner. Since spending is the problem, higher taxes cannot be the solution. Higher taxes just encourage more reckless spending.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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