Advocates for the poor, disabled, public education and roads painted a grim picture for the future of Missouri at a recent forum, suggesting the State needs to levy new taxes.
Missouri will face a shortfall of $340 million by midyear, resulting from an economic downturn that has sent shock waves through the state.
Amy Blouin, founder and executive director of the Missouri Budget Project, said the state is looking at a “significant, significant” ripple effect.
“We’re at the point where there’s nothing to cut,” Blouin said. “Everything we cut now is on top of the pain that has already happened.”
The Missouri Budget Project, a St. Louis-based non-partisan and nonprofit fiscal policy organization, sponsored the event at the University of Missouri-St. Louis to discuss the state’s budget issues.
As the economy worsens, more residents will depend on health care and social services, according to the project.
In the meantime, a variety of services could be trimmed in education, health care and transportation.
With unemployment rising and consumer confidence falling, state collections are down 4 percent so far this fiscal year. Budget officials project a 5 percent drop by the end of the year, resulting in the potential $340 million gap.
The fiscal year began July 1, 2008 and ends June 30, 2009.
Gov.-elect Jay Nixon announced plans to scrutinize tax credits, state construction projects and long-term government contracts for goods and services for savings to help the $340 million projected shortfall.
He called for financial reviews of every state agency and major program.
But spending is not the problem, Blouin said.
The state spends nearly as much as it did in 1999, when adjusted for inflation. Instead, a series of policy changes, such as tax cuts, earmarking revenues and tax credits, has reduced revenue over the years.
Furthermore, the state has yet to recuperate from the 2001 economic downturn, following the Sept. 11 attacks, in which it made cuts that resulted in 100,000 residents losing their Medicaid and tuition increases in higher education.
Blouin said the state’s tax structure is antiquated.
She pointed to consumers buying more goods and services via the internet, where they don’t have to pay state sales taxes.
Missouri has the 46th lowest state and local spending per capita in the nation. The largest chunk of the state’s operating budget goes to K-12 education (34 percent) followed by social services consuming 19 percent.
“When we reduce revenue, we need to increase spending just to meet inflationary needs,” Blouin said. “Just as you do at home, the State has to pay more for basic services in order to keep them at the same level that they were last year.”
Missouri is not alone. Nearly every state is experiencing economic difficulties.
If the country’s current conditions continue, which economists expect that it will until late 2010, Missouri will face up to a $900 million deficit in the 2010 fiscal year, Blouin said.
Blouin suggested for Congress to pass federal fiscal relief to the states as a way to shore up funds quickly.
Data from the U.S. Census Bureau shows that 742,000 Missourians live in poverty.
The Missouri Budget Project is located at 4130 Lindell Blvd. For more information call 314-652-1400 or go to www.mobudget.org.