Ervin: Building Castles in the Sky

"The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."
–Thomas Jefferson,letter to John Taylor, May 28, 1816


Last week Governor Jay Nixon delivered the annual State of the State address to the Missouri General Assembly, the Missouri Supreme Court, Missouri Cabinet heads, and to the people of our great state.

This annual address has become the vehicle for a governor to outline his vision for Missouri and present the executive branch's budget recommendations for the next fiscal year.  It is also the event that adds definition to the agenda boundaries of each body in the legislature and the governor's office for the current session of the General Assembly.

This year's State of the State address did none of that.  In fact, Governor Nixon dodged revealing the actual state of the state and it is now painfully obvious why after he has revealed his proposed budget to the General Assembly.

As I mentioned in a previous column, the Governor, House, and Senate budget leaders have agreed upon the revised consensus revenue estimate for the remainder of this fiscal year which ends on June 30, 2010 predicting that revenues will be 6.4% less than expected at $6.97 billion in general revenue.  The fiscal year 2010 budget was passed based upon an overly optimistic revenue estimate of $7.76 billion.

They also agreed upon the consensus revenue estimate for the next budget year which begins on July 1, 2010 suggesting a growth in state general revenue collections of 3.5% resulting in $7.223 billion of general revenue.

It was revealed this week that January revenues are 22.36% less than they were in January of last year with year to date revenue collections now falling to a negative 12.55% down from 10.5% last month year to date.  As a result, Governor Nixon announced another round of withholds from the current budget of $74 million.

Unlike Congress, we must have a balanced budget.  The state of Missouri can't print money to satisfy unrestrained and politically motivated spending habits - even in an election year.  To have a balanced budget, the General Assembly and the governor's office must build a state budget at or, preferably, below that target.

Governor Nixon's budget proposal would spend $8.317 billion of general revenue, a number that exceeds the agreed upon CRE by $1.09 billion, or 15% - this is not a balanced budget proposal.  The governor would pay for these excessive increases with federal "stimulus" money, which I contend is federal "dependence" money, which Missouri is expected to receive which is about $900 million dollars plus a phantom $300 million that might come from the federal government even though the legislation has not been passed by Congress yet.

After years of fiscal discipline, a budget is now being proposed that relies on significant one-time monies that may or may not materialize.  Our budget difficulties earlier this decade stemmed from uncontrolled spending that relied on one-time monies.  This can't be done, but politicians are often afraid of making the difficult decisions that require discipline, because they fear unpopularity, especially in an election year like this one.

The disciplined decisions of the past few years have put Missouri in better financial position to weather this economic downturn than most states.  Missouri remains one of only seven states that still have a triple-A bond ratings from the three major bond rating agencies.

The proposed budget suggests that $900 million of one-time monies be used to pay for ongoing operating costs of government and its programs.  This money will not be available next year.  It may be considered good politics by some, but it is lousy fiscal policy.  We can't allow the federal "stimulus" to lead us down the path to ever more federal dependency and greater threats to the pocketbooks of Missourians.

Data released this week claim that unemployment may drop to 9.8% this year, down from the current 10% unemployment rate.  The data also suggests that with 5% growth in GDP throughout the year, unemployment would only drop to 9%.

How out of touch with our existing economic situation can we be to accept a budget that requires a 15% more general revenue knowing that we are currently experiencing 9.6% unemployment in Missouri?  It just won't happen - even the 3.5% CRE is too high and is setting us up for even bigger budget problems next year and years after.

This is a time for restraint, a time to prioritize, and a time to drive efficiencies into the state bureaucracy.  It is a time to shed the hindrances that hold back innovation and invention, a time to empower Missourians to build dreams, not sustain them where they are.

People are outraged with the unparalleled and unabated spending spree in Washington, DC that denies the economic realities that we live in.  Missouri cannot, and must not, follow in those footsteps.

This is a time when doing what is right is far more important than doing what is popular and hiding our actual state of the state.  We can't spend time building castles in the sky and hoping for a miracle.  Lest we forget, hope is not a plan.

As always, I appreciate hearing your comments, opinions and concerns.  LaTonya Percival, my Legislative Assistant, and I are always available to answer questions and address your concerns.  I can be reached in Jefferson City at (573)751-2238 or you can write me at doug{dot}ervin{at}house{dot}mo{dot}gov or regular mail at 201 West Capitol Avenue, Room 412A, Jefferson City, MO 65101.