Amy Blouin, Executive Director The Missouri Budget Project mobudget

1. What Happens in the Capitol Doesn’t Stay in the Capitol…..How State Budget Decisions Impact You.Updated March 2008 Amy Blouin, Executive Director The Missouri Budget Project www.mobudget.org

2. The Budget Crisis- Where We Stand 2008 vs. 2001 • Health Care: • The number of uninsured Missourians increased by 15% between 2005 and 2006- three times the rate of the rest of the country. • Missouri now has 770,000 uninsured (US Census). • Higher Education: • Missouri Colleges and Universities receive roughly the same amount of state support in 2008 as they did in 2001 ($771 million in FY 2008 vs. $767 FY 2001), • When inflation is taken into account, Missouri Colleges and Universities are $140 million behind their 2001 funding levels, • Tuition has increased by 75% as a result. • K-12 Education: • Increases are just meeting the 2005 School Funding Formula requirements, increasing by about 4% per year, slightly more than inflation.

3. Comparing Missouri to Other States 44th for State Spending Per Capita 46th for State and Local Spending Per Capita 44th K-12 Spending Per Capita 46th Lowest Nationally for Per Capita spending on Higher Education One of the lowest eligibility levels for Health Care assistance for parents Statistics from Morgan Quitno State Rankings

4. Fiscal Year 2009 Governor’s Budget Proposal(In Billions)

5. Fiscal Year 2009 Revenue Summary (In Billions)

6. Fiscal Outlook: If it sounds too good to be true, it probably is! $500 million of Governor’s spending comes from carry-forward of unspent revenue particularly in FY 2007 and FY 2008 Acts in much the same way as one-time revenues would: leaves considerable holewhen it is gone “Real” Revenue base is $8.7 billion before refunds

7. Fiscal Outlook: Revenue Loss Policy Changes in recent years will result in decreasing revenue: Amendment 3 from 2004: $185 million loss State Tax Cuts from 2007: $168 million TOTAL Revenue Lost from “Base” $353 million per year, or an amount that is greater than the average annual growth in state revenue.

8. Fiscal Outlook: Long Term Obligations Overall Inflation to maintain current programs : $155 million Telecomm Court Case $60 million Foundation Formula Annual Adjustment $126 million TOTAL $341 million per year

9. Economic Conditions Impact State Revenue Unemployment Projected to return to 5% in 2008 Real GDP slows to 2.4% Consumer spending slowed in face of gas prices, housing problems Personal Income Growth drops from 5.4% to 4.5% in 2009 (above figures from the Governor’s FY 2009 Budget Summary) The median income in Missouri is now $42,841 – approximately $2,000 lower than it was in 2001 (US Census).

10. Overall Fiscal Projections The MBP Estimates that as a result of policy changes including tax cuts and diversions of revenue, long term obligations, and economic downturn Missouri will face a $500 million shortfall by FY 2010. Transportation estimates an additional cut of $700 million in transportation revenue by FY 2010 30 states are now estimating shortfalls in the current year or in the coming year Missouri, and other states Can Not Operate in a Deficit, so Projected Shortfall will result in Cuts to Services

11. Opportunities Short Term: • Federal Fiscal Relief & Economic Stimulus: Direct Grants to States are needed, similar to 2001 crisis. • Prevent false “state economic stimulus” proposals • Stop Proposals that Earmark Revenue for Specific Needs leads to short-changing other services • Decouple from Federal Tax Changes • Prevent TABOR and other “gimmicks”

12. Opportunities Long Term: • Educate, Educate, Educate • Child Welfare. Health Care, Education, Higher Education, Transportation groups have opportunity to come together to work toward a viable and sustainable solution • Join the MBP email alert system