Sinking state revenues worry Governor Nixon enough to cut $105 million from the coming state budget and withhold $325 million more.
Nixon signed the budget into law Thursday morning, only days prior to the start of the state fiscal year on July 1st. The state legislature approved a $23 billion budget, based on an estimated revenue growth of a 1%. It appears now that tax revenue flowing to Jefferson City won’t even be able to meet that meager target.
During a news conference held in his Capitol office, Nixon provided a broad outline of his budget action. Of the $105 million dollars in line-item vetoes, $22.8 million will be cut from the state operating budget and $82.2 million in capital improvements will be cut. The governor is withholding another $60 million from the state operating budget and $265 million in capital improvement projects. Those funds could be released if state revenue rebounds.
So far, it has done anything but. The current budget, which ends at the end of the month, was based on a 3.4% growth in state revenue. Tax revenue, though, has plunged. The recession has crippled much of the state economy, causing a dramatic drop in state revenue, off 6.7% for the current year, a more than $760 million hit on revenue coming in to fund state programs and services.
That drop has shaken the Nixon Administration and caused it to re-examine the budget approved by the legislature during this year’s session. The legislature based the budget on an estimate that revenue would be relatively flat over the next year. Administration budget watchers now believe state revenue will dip a percent next year, which would bring in $371.3 million less than expected.
Nixon says his administration will be keeping an eye on state revenue. If the recession recedes and the economy picks up steam, state revenue could begin growing again and then he would release the withholdings.