The way it is: Budget cuts move Missouri south.
R.J. Matson/Post-Dispatch
Last week, Gov. Jay Nixon whacked another $203.7 million from the state’s budget. He’d already cut $385 million in July, and vetoed another $105 million when he signed the $23 billion budget in June.
The governor really had no choice. State revenue collections were down 10 percent in the first quarter of the fiscal year, so the money wasn’t there to spend as the Missouri Legislature had anticipated. “This isn’t Washington,” Mr. Nixon said. “We don’t get to print money.”
No, but had Washington not sent federal stimulus money to the state, the budget hole would be even deeper. This year’s state budget contains $1.3 billion in federal stimulus money for projects and programs normally funded by state tax dollars.
That means that relative to the apocalypse on the horizon, this year’s budget is in good shape. Next year could be a problem, but the state held back some of its stimulus money to spend next year, so Missouri might limp through fiscal 2011 as well.
But unless the economy rebounds dramatically — unlikely for reasons we’ll discuss shortly — the real trouble will occur in fiscal 2012. Budget analysts are using words like “bloodbath” to describe what could happen then.
The state’s economy has changed fundamentally, and for the worse. In 2008, 785,000 of the 5.9 million people in Missouri lived in poverty — 13.3 percent. That’s up more than 5 percent in eight years. Given that unemployment in the state was 9.5 percent in September (and headed up), it’s almost certain that this year’s poverty rate is higher.
Between 2000 and 2008, median family income in Missouri dropped by $6,427 when adjusted for inflation. That’s the third-largest decline of any state. The number of working poor — families of three living on less than $36,000 a year — is about one in five.
The big reason for the drop: the loss of good-paying blue-collar jobs, particularly in manufacturing. In 1995, one in every five Missourians was employed in manufacturing. Last year, it was one in 10. The state has lost 101,500 manufacturing jobs this decade.
Less income means fewer income taxes paid to the state. Less income means fewer purchases, meaning less sales tax to the state. More poor and working-poor people means more demand for state services. More than a million Missourians now receive food stamps. The number of Missourians without health insurance is now about 800,000. One in seven Missourians — 871,000, more than half of them children — are enrolled in Medicaid.
Over the last decade, Missouri — almost without realizing it — has become a Deep South state. We are a low-tax, “business-friendly” state but without a lot of new jobs to show for it. We have a large and growing population of service-dependent people, urban and rural alike.
We have a Legislature dominated by conservative Republicans and a conservative Democratic governor who are little inclined to stand up for people who are hurting and even less inclined to raise taxes on those who aren’t.
The state taxes income at a flat rate of 6 percent for everything over $9,000. It passes out tax credits without paying much attention to whether it’s getting its money back. It doesn’t tax Internet purchases. The corporate tax structure is shot through with loopholes. Kleptocrats and mountebanks run Jefferson City and few people take notice. We only live here.
It is what it is, and it will get worse until enough Missourians decide they’ve had enough.
When he succeeded Holden in 2005, Republican Gov. Matt Blunt also discovered a budget with spending demands exceeding revenues. Blunt and the Republican-led Legislature responded by eliminating Medicaid health care coverage for some low-income adults and reducing benefits for others.
To restore Medicaid coverage to about 110,000 people and replace the lost benefits for an additional 280,000 would cost the state about $265 million, according to the Department of Social Services.
dailyjournalonline.com/articles/2008/11/10/news/…
Blunt confronted a dreadful situation when he took office. Like most states, Missouri has a balanced budget requirement. And his Democratic predecessor, Holden, had used every fiscal
trick he could find to meet this obligation while increasing spending. To cover the $1.1 billion deficit, Blunt would have to slash spending, raise taxes, or both.
If he had placed Medicaid off-limits to spending cuts and included a tax hike in his fiscal plan, Blunt might have averted a storm of criticism. But that would merely have postponed the budget crisis until this year. “Without the Medicaid cuts, Matt Blunt’s poll numbers would be among the highest in the country,” one of his state house allies insists. And that might be true.
But Medicaid spending was hard to ignore. It covered 16 percent of Missourians and took up 31 percent of the state budget. Blunt decided to investigate the program, deny benefits to those who were ineligible, and tighten the qualifications. He knew he’d be attacked, but the assault was worse than expected. It lasted for most of 2005. “He had his butt kicked over Medicaid,” Feather says. Medicaid’s share of the state budget, however, has shrunk to 29 percent.
weeklystandard.com/Content/Public/Articles/000/000/012/…
I know Missouri has to balance its budget. But I’d just like to say, as someone who has seen this up close and personal, that all these people losing their jobs is a tragedy.
This is people being called individually into an office and told they are losing their livelihood, and the person sitting there in profound shock, humiliation, and disbelief. Some of these families will be financially devastated.
Then other workers have to double up on their workload, work longer hours, get stressed out. And listen to the public complain about how slow and unresponsive government services are.
There never is - nor can there ever be - enough $s to forever support the poor. It’s a cycle that gets worse & worse, sucking more out of those towing the cart and enabling (if not seducing) others to jump in. 1/7 are on medicaid; I’ve heard much higher #s for other states. The bloodbath mentioned above misses the real tragic object. It’s not the chocking off of welfare per se, it’s that so many lives are wasted by becoming dependent moochers or - on the other side - the bitter looted. Welfare is a death-trap for all involved, 1st for those on the receiving end (when it gets choked off), then for the collapsing empire (when the object of productivity becomes endless service to others). We’re there.
If we are so “business-friendly” why have so many companies left our state to manufacture in Mexico and Canada? Why aren’t the union’s lobbying efforts paying off with this Mr. O? Why isn’t Mr. O insisting that Jeffrey Immelt of GE bring back his manufacuring jobs to the U.S? Now that he owns the car companies, why aren’t we manufacuring his cars in the U.S.
Until manufacuring returns to the U.S., Missouri and all troubled states, which are almost all, will continue to have to cut where they can to meet their budgets especially when we waste money on busing kids to schools outside of their local school districts. No one yet has told me what happened to the $100,000 in computers found in a warehouse in 2001 while McCaskill was auditor. There is an enourmous amount of waste in state government. That is what they need to go after, not real jobs.
When Obama’s idea of a recovery is saving teaching jobs and increasing pay at Florida day care centers, we are going down the drain faster than you all can flush.
—More typical spin-meister dialogue by just one PR branch of the DNC. As I recall, when Matt Blunt took office with a looming 1.1 billion dollar budget shortfall left to him by his Democrat predecessor, and made cuts in Medicaid to curtail the shortfall, you called it “balancing the budget on the backs of the poor”.
Blunt confronted a dreadful situation when he took office. And his Democratic predecessor, Holden, had used every fiscal trick he could find to meet his obligation,(used one-time federal grant money earmarked for infrastructure improvements) while increasing spending. To cover the $1.1 billion deficit, Blunt would have to slash spending, raise taxes, or both.
—Medicaid spending was hard to ignore. It covered 16 percent of Missourians and took up 31 percent of the state budget. Blunt decided to investigate the program, deny benefits to those who were ineligible, and tighten the qualifications. He decreased the share of Medicaid to 29% of the budget, while starting a subsidy to help cover those whose Medicaid was cut. Critics called that, “a payout to private insurers”. Beginning to sound familiar?
—Now we have Governor Nixon, in true Democrat fashion, using one-time federal grant money earmarked for security and infrastructure improvements being used to fill a gap in state resources, while cutting low-paying state workers jobs. Your predictably excusatory response, “the governor had no choice”. Then of course to fulfill your leftist agenda, you accuse mostly Republican state legislators of being “kleptocrats” and “mountebanks” for not raising taxes.
—You then go on to lament the economic downturn, and it’s resulting effect on the economy as part of the problem in revenue shortfalls. Your solution: Raise taxes on those same businesses that are already experiencing difficulty. This solution would only cause more layoffs, thus increasing the downward spiral. This also sounds very familiar.
—You unwittingly have detailed in not so plain English why liberal fiscal policy is flawed, and must be removed from legislative thinking.
Wake up Missourians and smell what the Democrats are cooking, refried beans with no nutritional value. When the cupboard is already bare, the last thing we need is more of the same kind of thinking that led us into this condition.
To The Editorial Board,
I agree, the Post Dispatch should be taxed at a rate of 95% of gross income. Wouldn’t that be great.
For every single person who believes they are not taxed enough, how much extra did you send the state last year at tax time? How many of you added an extra $100 to your personal property tax payment last year? How about your real estate taxes? Income taxes? You think we should be taxed on our internet purchases? How many of you mailed in the taxes on your purchases?
You’re all a bunch of hypocrites who want the state revenues to increase for more social programs but you don’t want to pay for it with your own money. You want everyone else to pay for it. Well, I’m taxed enough already.
If you don’t like the manufacturing job losses in the state, stop endorsing the liberal democrat candidates for federal office. These are the people who are taxing businesses into oblivion. Stop advertising and buying foreign made goods.
Your right about one thing, it is what it is. Remember, socialism only works until you run out of other people’s money and we’re starting to run out.
footnote: data from previous story compiled from dailyjournalonline.com/articles/2008/11/10/news/…
weeklystandard.com/Content/Public/Articles/000/000/012/…
It is only going to get worse. If cap and tax passes, energy prices here will skyrocket and more businesses will leave. The elites which we allow to run this country don’t want a manufacturing base. They want, for whatever reason, to be Europe. NAFTA has been a disaster. Onerous regulation like Affirmative Action, nonsensical environmental rules, etc. have killed business in Missouri and America. Wealth is created and suing each other doesn’t grow the pie. While liberals scream about the plight of the middle class, they do everything possible to kill it by driving away the very jobs that made the middle class possible.
Six percent isn’t chickenfeed when you think that is only for state government. We are also taxed to support cities, counties, zoos, busses, etc., not to mention up to 35% to the Fed. I think the problem with both our state and Federal governments is they’ve just become paralyzed by the weight of their pasts. Clearly, there are programs that are not needed. Artifacts of the past that just get funded every year. I heard this morning that the State Auditor’s ex-husband got a contact for a license office that could generate $9 million. Am I the only one wondering why the state can’t run these offices? I know both parties do it. That doesn’t make it right. While tax credits can accomplish good things, I think most of the time they are simply a transfer from us to private parties. They should be the first thing to go followed closely by TIF’s.
If I were Governor, I would be giving my staff and the state this challenge: “find the next product that we can manufacture that will replace the jobs we’ve lost. What can we do here that uses what we have here that can’t easily be duplicated elsewhere?” Once that is answered, I would be all for a bond issue to build the infrastructure necessary. Hint: it isn’t ethanol or windmills.
There’s a way to improve delivery of healthcare for all Missourians, boost our educational system and our economy; if the Governor and the General Assembly are willing to put these to a vote of all Missourians.
http://dangerousintersection.org/2009/02/02/states-don%e2%80%99t-have-to-wait-for-stimulus-payments/
C’mon, Jay! I know you have it in you! Just ask the General Assembly to let the voters decide the direction of government in Missouri for the next 30 years!
Governments should not be subject to budgets or constraints. There is an unending stream of revenue from corporations. We CAN have everything we want.
come’on Horri, I’m saying the things you want to hear. Remove me from your black list