It seems the appropriations process in the Missouri Senate had ground to a standstill before finally passing early Wednesday. What was the cause of the holdup? Apparently, a group of nine senators stalled debate on the budget. The senators argue that the budget fails to set aside enough money for unexpected expenses and that it is out of balance. They also claim that the budget relies on $200 million from one-time funding sources.
Given that Missouri Gov. Jay Nixon’s Executive Budget explicitly states that it is counting on a one-time tax amnesty to help plug the budget shortfall, it would seem that these senators’ grievances are well-grounded. As a general rule, any organization that has a budget should prepare for the worst and not count on rosy scenarios. Unfortunately, rosy scenarios seem to be the only game in town.
It is not hard to imagine WHY the state is relying on overly optimistic outlooks when it budgets. The Missouri Constitution mandates a balanced budget and thus revenue needs to be raised to match expenses or expenses need to be cut in order to match revenues. Neither option is attractive to legislators, thus, we have the current budget maneuvers.
One option to help deal with the budget, which seems to have support from both the left and the right, would be to rein in the explosion in state tax credit issuances. Every new issuance puts the state on the hook for another dollar and every tax credit redemption costs the state a dollar of revenue. The state needs to make serious changes in how it does business; tax credit reform would be a good start.