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On Tuesday evening, Gov. Jay Nixon will present his 2013 budget to a joint session of Missouri’s General Assembly in his annual State of the State address.
In last year’s State of the State address, Gov. Nixon stressed the importance of making state government smarter and more efficient. One year later, we are still faced with budget shortfalls. Despite some improvement in economic conditions, Missouri’s budget still remains in a deep hole, and analysts are predicting shortfalls of $500 to $600 million for 2013. Even with the state’s modest 3.9 percent increase in general revenue over the past year, most of these gains will be consumed by increases in Medicaid costs. Though Missouri has a federal Medicaid match, it is expected to drop by $90 million this year. This decrease in federal funds will have to be made up from the state’s general revenue fund.
As most of you know, the first and foremost responsibility of Missouri’s General Assembly is to pass a balanced budget. This year’s budgetary process will present many difficult challenges, because Missouri doesn’t have adequate revenues available to fund all the state’s existing programs and services. While some are proposing across-the-board cuts, others are looking for new revenue sources. Consideration is being given to an increase in tobacco tax or other sin tax items. Another possibility could be some form of tax credit reforms. Tax credits can lower the tax liability for both individuals and corporations, thus reducing the amount of dollars the state is able to collect. However, most tax credits are designed to encourage businesses to create jobs, which ultimately increases the taxes the state will collect. Tax credits could become a major campaign issue in Missouri this year.
The majority of analysts believe the answer to Missouri’s economic downturn lies in the creation of new jobs. With Missouri’s unemployment rate still at 8.5 percent, putting Missourians back to work will be a top priority.
Today’s economic times are difficult for families, as well as businesses. If a family experiences a decrease in income, their wisest option is to reduce spending in order to make ends meet. This commonsense approach must also be followed in state government. We must tighten our belt to balance the budget and not raise job-killing taxes on Missourians. The real answer to the budget problem is to make better decisions with the revenue we have.
On Tuesday evening, Gov. Jay Nixon will present his 2013 budget to a joint session of Missouri’s General Assembly in his annual State of the State address.
In last year’s State of the State address, Gov. Nixon stressed the importance of making state government smarter and more efficient. One year later, we are still faced with budget shortfalls. Despite some improvement in economic conditions, Missouri’s budget still remains in a deep hole, and analysts are predicting shortfalls of $500 to $600 million for 2013. Even with the state’s modest 3.9 percent increase in general revenue over the past year, most of these gains will be consumed by increases in Medicaid costs. Though Missouri has a federal Medicaid match, it is expected to drop by $90 million this year. This decrease in federal funds will have to be made up from the state’s general revenue fund.
As most of you know, the first and foremost responsibility of Missouri’s General Assembly is to pass a balanced budget. This year’s budgetary process will present many difficult challenges, because Missouri doesn’t have adequate revenues available to fund all the state’s existing programs and services. While some are proposing across-the-board cuts, others are looking for new revenue sources. Consideration is being given to an increase in tobacco tax or other sin tax items. Another possibility could be some form of tax credit reforms. Tax credits can lower the tax liability for both individuals and corporations, thus reducing the amount of dollars the state is able to collect. However, most tax credits are designed to encourage businesses to create jobs, which ultimately increases the taxes the state will collect. Tax credits could become a major campaign issue in Missouri this year.
The majority of analysts believe the answer to Missouri’s economic downturn lies in the creation of new jobs. With Missouri’s unemployment rate still at 8.5 percent, putting Missourians back to work will be a top priority.
Today’s economic times are difficult for families, as well as businesses. If a family experiences a decrease in income, their wisest option is to reduce spending in order to make ends meet. This commonsense approach must also be followed in state government. We must tighten our belt to balance the budget and not raise job-killing taxes on Missourians. The real answer to the budget problem is to make better decisions with the revenue we have.
While we are working to balance the current budget, it will be important to take measures to help prevent future budgetary shortfalls. The Taxpayer Protection Act, if passed, will limit growth in the budget by using a formula that allows the budget to increase only in proportion to the state’s population growth and the rate of inflation. When times were good and there was plenty of available revenue for the budget, past legislatures increased the size and the scope of government. When times turned lean and revenues went down, some programs and services could not be maintained. The Taxpayer Protection Act makes adjustments for savings in prosperous economic times in order to help the state through the tough economic times, thus helping to ease the strain of boom and bust cycles on future budgets. This is similar to the retained earnings concept in a corporation.
With predicted financial challenges facing the state this year, including the Medicaid increases, it will be interesting to see what Gov. Nixon’s approach will be and what he will tell us on Tuesday evening.
If I can be of help to you with any state matter, please do not hesitate to contact me at one of the following:
Mail: Bill Reiboldt, Office 235-BB, State Capitol, 201 W. Capitol, Jefferson City, MO 65101. Telephone: (573) 751-9781. Personal cell phone: 456-0441. Email: bill.reiboldt@house.mo.gov
Bill Reiboldt represents the people of Newton County in the Missouri House of Representatives.
