Last week, I attended my first meeting as a board member of the Missouri Higher Education Partnership (MOHEP). During that meeting, James Moody (who is a Government Relations Consultant) talked in detail about the current budgetary issues being faced by Missouri and what to expect in the next few years. It was sobering to say the least.
Regardless of where you fall politically, more funding cuts are all but certain and the pain we felt this year (FY2011) is just the beginning until the economy turns around.
Here are some highlights from Moody’s presentation:
FY2009 – Missouri revenues fell 7.0%
FY2010 – Missouri revenues fell 9.1%
FY2011 – Missouri Revenues (thru Q1) – fell 1.8%
FY2011 Budget assumes 2% annual revenue growth
FY2012 Budget planning assumes 6% growth and major increases in capital gains receipts. Even with that, there is currently a $700 million gap to fill with only $212 million if Federal stimulus to fill it. (That equates to another $500 million in spending cuts.)
So what now? Well, without some other forms of revenues, our legislature will finally have to face a day of reckoning and actually make our spending fall within our revenue sources (assuming of course that Washington DC doesn’t offer more “help” in the form of more stimulus funds). There is a little wiggle room in the tax ceilings, but it’s unlikely you would see any increases come through the General Assembly. Throw in the limitations of the Hancock and Carnahan/Farm Bureau amendments and we’re basically stuck with cutting non-Conservation and non-MODOT spending (those two agencies are quasi-independent and excluded from these cuts.)
The impact will be felt (as already is being predicted) by education at all levels. Social programs will inevitably be hit as well. Regardless of the party, making those unpopular cuts will make for a very tough two years coming up in Jefferson City.
Just for reference, here are some tax numbers presented by Moody for what could be generated annually from various taxes (increases require voter approval:)
- Sales Tax – 1% increase = $600 million
- Income Tax – 1% increase (from 6% to 7%) = $900 million
- Tobacco Tax – each 1-cent increase is roughly $5.35 million
- Internet Sales Tax enforcement - $100 - $200 million
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