Missouri budget director says continued spending restrictions unlikely in new budget year



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JEFFERSON CITY, Missouri — After years of restrictions on spending that have frustrated lawmakers and rendered some state programs ineffective, Missouri Gov. Jay Nixon's office says finances are in place to fully fund the new year's budget — making further spending freezes unlikely.

Newly released data shows revenues were up 8.8 percent in the fiscal year that ended last week compared to the previous year. State budget director Linda Luebbering said that means budget restrictions are unlikely at this time.

"We're looking pretty good for fiscal year 2016," Luebbering said.

Yet even with a stronger-than-expected end to the budget year that officials hope will jumpstart state finances in the new fiscal year, collections still fell short of revenue growth Nixon's office said was needed to fully fund last year's budget.

While the 8.8 percent growth was above revised projections by Nixon and lawmakers of about 4.6 percent, it fell below the 10 percent Nixon's office said was called for in the budget.

Part of the problem, Luebbering said, were low collections in fiscal year 2014, when revenue fell significantly short of expectations. The state ended that budget year with a 1 percent drop in revenue compared to the previous fiscal year.

As a result, Missouri began fiscal year 2015 with a lower-than-typical cash balance.

Nixon had cited lagging revenues when he restricted hundreds of millions of dollars in spending last year. And although the governor sporadically released $521.7 million as state collections improved throughout the year, about $67 million never was spent.

Some of the restrictions included withholding $5 million that lawmakers had budgeted for the Republican National Convention. More than $17 million intended to pay for adult dental benefits also was restricted, but Nixon said that will be paid for through a special earmarked fund lawmakers created this session.

This year could signal a turning point.

Preliminary estimates from Nixon's office call for a 2 percent increase in general revenue this fiscal year in order to afford the spending outlined in the budget. Luebbering called that a "reasonable" increase, adding that strong revenue growth last fiscal year could mean a dip this year.

The state over time has averaged about a 3.5 percent growth each year, although Luebbering said that varies each year.

The state ended fiscal year 2015 with a $277 million cash balance, or about 3 percent of final revenues.

Nixon touted what he called the state's "strong position" as the new fiscal year kicks off. He said compared to other states — Kansas, for example, which fell about .6 percent short of revenue expectations for last fiscal year — Missouri's "growing economy and AAA credit rating is enabling smart, responsible investments in our students, schools and communities."

Missouri's end-of-year balance still is well below the percent the state has had in previous years. In the past 15 years, the average cash balance has been about 5.8 percent of final revenue, Luebbering said. It's averaged about 9.2 percent in the past 30 years.

Luebbering said the lower percentage this year in part can be traced to lingering effects of the recession.


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