Moody’s Investors Service has changed the rating outlook to negative from stable on nine state and local governments, including the State of Missouri, and two state housing finance agency programs, in conjunction with an updated analysis of which Aaa-rated issuers have indirect linkages to the federal government.

KBIA, Columbia’s NPR affiliate, had a very interesting story this weekend that more closely examined Moody’s decision. In a story that quotes Show-Me’s own Joe Haslag, the reason for the change in outlook is pretty clear: Medicaid. Indeed, the Medicaid expansion under the Affordable Care Act will cost Missouri (us) nearly $3 billion over the next decade, and that does not include the cost to the federal government (again, also us.) How will we pay for all of this spending? Those plans do not appear to be forthcoming, unless “rack up a bunch of debt” constitutes a plan these days.

And increasingly, Missouri legislators are getting more vocal about their concerns regarding Medicaid:

“We’re faced right now with making a pretty darn big decision on Medicaid, and that is if we’re going to basically hitch our wagon a lot tighter to the federal government,” said Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia. “What does that mean for long-term economic stability for the state of Missouri?

“It appears to me that what got us the negative outlook, we are simply going to double down on that now if we do Medicaid expansion,” Schaeffer [sic] added.

Schaefer and Moody’s are correct in questioning the financial position of the state in the context of potentially massive new state spending that is heavily reliant on federal dollars. We should all be so concerned.

The post Prospect Of Medicaid Expansion Appears To Have Turned Missouri’s Credit Outlook Negative appeared first on Show-Me Institute.

Sen. Jason Crowell (R-Dist. 27) made waves when he spoke out on Wednesday against gimmicks that legislators are using to avoid tough budgetary decisions. The Columbia Missourian reports that Crowell blocked a vote that would extend the amount of time the legislature has to replenish the state’s “rainy day fund.”

Crowell also argued that the proposed state budget counts on uncertain sources of revenue ($70 million that is estimated to be received from delinquent taxpayers), and one-time sources of funding (a $40 million settlement that the state has not yet received).

In a very passionate speech, Crowell stressed the need for tax credit reform, something he has called for repeatedly. Crowell has sponsored several bills to subject tax credits to the appropriations process. Tax credits currently are not subject to appropriations, meaning that tax credit money (which has consistently been more than $500 million in recent years), comes straight out of state coffers, without consideration of whether the state can afford the expense.

During the hearing, Crowell asked Sen. Kurt Schaefer (R-Dist. 19), the budget chairman,  “When are you going to pick Mizzou over Jeff Smith? That’s what this is all about, Senator.”

Crowell was referring to a developer who the St. Louis Post-Dispatch editorial board has called out for benefiting greatly from the state’s Low Income Housing Tax Credit, and alluding to the cuts that have been made to state higher education. These are the kinds of trade-offs that could be considered if tax credits were subject to appropriations; instead, legislators continue to passively give priority to tax credits.

Indeed, St. Louis Public Radio reports that Crowell promised to filibuster uses of one-time funding unless serious overhauls of the tax credit system, prison spending, and state pensions are considered.

Good luck.

The post Props To Sen. Crowell For Speaking Out Against Budget Gimmicks appeared first on Show-Me Institute.

State Representative Chris Kelly and State Senator Kurt Schaefer discussed the state of the state at the Show-Me Forum in Columbia on Monday, February 6. Both agree Missouri doesn’t have enough revenues, but Rep. Kelly insists the shortfall shouldn’t come from education.

The post Missouri’s Budget Shortfall: Two Legislators’ Views appeared first on Show-Me Institute.

Missouri capitol building in Jefferson City.

COLUMBIA — On Monday night, Sen. Kurt Schaefer (R-Columbia) told the Columbia Board of Education that more cuts to the state budget seemed certain, and that the steep decline in state tax revenues would likely affect funding for public schools.

“I don’t know the public really has a full understanding of how difficult of a budget situation we’re in,” he said.

According to Schaefer, who is vice chairman of the Senate Appropriations Committee, general tax revenues were down 6.9 percent for fiscal year 2009 and are down 10.8 percent for the current fiscal year. The percentage declines translate to about a $500 million revenue loss in fiscal year 2009, and at least another $500 million by the end of this fiscal year.

The state last saw such a decline during fiscal years 2002 and 2003, when the state’s general revenue fell $463 million for both years and then rebounded, Schaefer said.

Schaefer said that the Department of Elementary and Secondary Education (DESE) has this year requested $105 million in order to fully fund the amount of money that the state promises each year to local school districts.

Jan Mees, board president, asked whether there would be any more state withholdings from the budget.

There likely would be, Schaefer said. He said that Gov. Jay Nixon’s cuts seemed to be based on the expectation of a 4-percent decrease in revenues for the year, but pointed out that revenues will likely fall short even of that decline. The state seems poised for a 7-percent decrease for the current fiscal year, he said.

“What can we as a school board do other than to continue to lobby our legislators?” asked district Chief Financial Officer Linda Quinley.

So far, Schaefer said, the best testimony given during the senate appropriations hearings came from experts who knew how money could be spent the most effectively. Also, he said, school districts should show legislators how they have already cut their budgets.

Schaefer said that for him personally, K–12 education and higher education are priorities when drafting the state’s budget.

But, he said, “I don’t think that anybody should be under the illusion that these cuts aren’t going to be painful, because I think that they’re going to be very painful for people. Our job in the General Assembly is to make sure that the cuts that are going to be made are the least negative and the least harmful cuts that can be made.”

Andrew Guevara is a student at the University of Missouri–Columbia.

The post School Districts Likely to See State Funding Cut appeared first on Show-Me Institute.

JEFFERSON CITY — The requests weren’t for more money, but for a halt to additional budget cuts. On Monday, the Senate Appropriations Committee began a series of public hearings to hear various government agency representatives plead for maintained funding from the state. With state tax revenues down, however, more cuts will likely be made.

“We’re looking at a billion dollar shortfall,” said Sen. Jim Lembke (R–Saint Louis), “and it’s going to be worse next year.”

About 30 people asked the committee on Monday to maintain funding for governmental programs that fall underneath the administrative umbrellas of the Department of Elementary and Secondary Education, the Department of Higher Education, the Department of Transportation, the Department of Corrections, and the Office of Administration. About 65 more are slated to testify on Tuesday, said Committee Director Dan Haug. Each person testifying is allowed three minutes to speak.

The public testimony is the first step in the state’s budgeting process, which will resume in full swing after the governor’s State of the State address in January.

Larry Hendren, testifying on behalf of the University of Missouri’s Alliance of Alumni, told the committee that although the university has frozen tuition and student fees, it is receiving $2 million from the federal government to balance its operating budget, and has restructured retirement benefits — neither of which are sustainable budget fixes.

But, with a predicted 6- or 8-percent shortfall for the year, committee members weren’t very sympathetic.

“Do you know anywhere we could cut?” asked Sen. Tim Green (D–Saint Louis). He explained that if the committee couldn’t make cuts in one program, it would have to cut another.

Throughout the afternoon, Green asked several others who requested the maintenance of state funding to offer suggestions of where they would make cuts. No one had a concrete answer.

With a severe tax revenue shortfall of more than 10 percent during the first quarter of fiscal year 2010, Gov. Jay Nixon made $200 million in state budget cuts, something Sen. Kurt Schaefer (R-Columbia), brought up several times during public testimony. He asked several representatives to explain the reasoning behind the cuts made to their specific government agencies, implying that the amounts seemed somewhat arbitrary.

Marcia Pfeiffer, testifying on behalf of state community colleges, said that about $7.75 million in state funding for community colleges had been cut. She said that the particular amount of funding that had been cut had no other significance than that it amounted to approximately 15 percent of the total $50 million that had been cut from state funding for higher education.

The post Facing Projected $1 Billion Shortfall, State Begins Budgeting Process appeared first on Show-Me Institute.

• Sentences given out would be more accurate when compared to time served
• It would hold judges to more accountable for sentencing, avoiding sentence inflation

The negatives:

• Larger fiscal burden to the state
• Longer stays in prison could lead to furthering of criminal education/recidivism
• Demeanor of inmates may change once the possibility of early release for good behavior has been eliminated

The post Bill Requires Inmates to Serve 85% of Their Sentences appeared first on Show-Me Institute.