The last time Missouri tapped its “Rainy Day” fund was in 1993. The great floods of that year had caused widespread destruction and devastation. Our state government, responsibly, tapped the reserve to finance reconstruction efforts that were needed to get Missouri back on track.
While the effects of December’s snow flurries and wind chill pale in comparison to the floods of 15 years ago, Missouri currently faces a calamity that is just as significant. The ongoing financial crisis has left countless government agencies, private businesses and ordinary citizens struggling to keep their heads above water.
In the past year, we have lost 15,000 jobs in our state. Since 2006, almost 100,000 Missourians have fallen below the poverty line. The median income for families in our state is $5,000 less than it was in 2001.
Former state Senator Wayne Goode, co-chair of Governor-elect Nixon’s transition team, recently announced that our state government faces a $342 million budget deficit because revenues have fallen drastically short of projections. In response to this challenge, the governor-elect announced a temporary freeze on long-term state contracts for goods and services and in-depth reviews of state capital projects and tax credits, with the aim of making “government smaller, more efficient and more responsive to the needs of Missouri families.” Goode also hinted that Governor-elect Nixon’s efforts to restore Medicaid funding, a major promise of his campaign, might now be reevaluated.
While I am in favor of anything that makes Missouri government more efficient and responsive, I strongly disagree with the initial response of our incoming governor to the projected deficits. If history has taught us anything about economic downturns, it’s that they are only made worse when our government pulls back and further limits the capital available to people and the businesses that employ them.
President-elect Obama understands this. That’s why he just committed to a massive public works construction program. Such an initiative should be replicated here in Missouri. Capital projects create good-paying jobs and will help our state’s economy get going again. Instead of freezing such efforts, we should expand them.
It is not Nixon’s fault that Matt Blunt and the Republican Legislature have run roughshod over Missouri’s finances and future for the past four years. But, it is his reality. State law requires our government to work within the confines of a balanced budget. Fortunately, the “Rainy Day” fund can help bridge the current revenue shortfall. Indeed, because of prudent saving, the state of Missouri has up to $277.8 million currently available to combat cash flow insufficiencies and help with budget stabilization in what is formally known as the “Budget Reserve Fund.”
Some will surely balk at tapping the reserve, but this is exactly why the fund was created. That is why I have sent a letter to the governor-elect, urging him to use the reserve and promising to help garner the two-thirds legislative majorities that are necessary to approve its utilization. When my fellow legislators and I return to session at the beginning of January, this simple solution must be at the top of our agenda.
Drawing on the Budget Reserve fund will help shore up state government finances, without scaling back the essential services it provides. It will ensure that anticipated new jobs are realized, improve state infrastructure and get our economy back on track. Indeed, using the Rainy Day fund is just the umbrella Missouri needs to shield us from the current economic storm.
Nasheed is state representative in Missouri’s 60th District.