Blunt sets education as top budget priority

By Marc Powers

Nevada Daily Mail

JEFFERSON CITY, Mo. -- Gov. Matt Blunt proposed $1.1 billion in core state budget cuts -- including to the Medicaid program -- so the savings can be used to increase funding for public schools and other priorities he outlined in his first State of the State address Wednesday.

Overall, the Republican governors $19.21 billion state operating budget for the fiscal year beginning July 1 would increase total state spending by $59.5 million from the current year.

During his 44-minute speech before a joint session of the General Assembly, Blunt said significant cuts in services provided by some state agencies, particularly mental health and social services, were necessary to focus resources elsewhere. He also pledged to oppose "job-destroying tax increases" that his Democratic predecessor, Bob Holden, had unsuccessfully pursued for two years.

"This budget is not built on tax increases," Blunt said. "I do not, and I will not, support increasing the tax burden on Missouri families. This means that we must make responsible and often difficult decisions in the rest of the budget."

Improving public education will be his administration's top priority, Blunt said. His budget proposal calls for an additional $170.6 million in direct state aid to local schools, a 4.7 percent increase over the current year. The money will come from expected growth in revenue collections and reductions in administrative costs at the Department of Elementary and Secondary Education. The spending hike still falls well short of fully funding of the formula for distributing education money to local schools.

Blunt said the current formula has exacerbated the funding disparities between rich and poor districts and called on lawmakers to fix the problem this year.

"It fails to distribute public funds fairly and has created a system of haves and have-nots," Blunt said.

His bold, three-pronged solution, however, is likely to stir controversy. Blunt's education plan calls for:

* Allowing districts with substantial local wealth to opt-out of the formula so money could be redirected to poorer districts. In exchange for forgoing state revenue, districts would be no longer be subject to most DESE regulations.

* Taking revenue from legalized gambling out of the formula and distributing it equally to districts on a per-pupil basis.

* Giving districts the option of replacing local property taxes with a sales or income tax.

Providing the official Democratic response following the speech, Attorney General Jay Nixon questioned whether the governor's education plan is constitutional.

"It is clearly a political cop-out to try to make the books balance," Nixon said. "This is a difficult issue and requires deep and serious thought. It's not a serious thought to say we're going to solve the foundation formula problem of this state by saying the laws don't apply to rich people."

While providing more money for K-12 education, Blunt's budget would hold the Department of Higher Education's budget flat at about $1 billion.

"When you look at how they had to balance the budget with a $750 million to $800 million shortfall and the very small amount of new revenue coming in, I think higher education should consider itself fortunate," Southeast Missouri State University President Dr. Ken Dobbins said.

However, Dobbins said the flat appropriation will force the university to further reduce expenses and to consider another round of tuition hikes.

Blunt's suggestions for squeezing more money out of the existing budget include cutting more than 1,000 jobs from the state's 60,000-plus workforce and closing the 11 state-run license bureaus, replacing them with privately operated offices such as those currently in place in most counties.

The big savings, however, would come from tightening Medicaid eligibility requirements and reducing or eliminating optional services offered through it. Cutting the medical assistance program for the poor, which will save the state an estimated $626 million, wasn't an easy decision but a necessary one given its ever-increasing cost, Blunt said.

"Now is the time for decisive action," Blunt said. "Missourians can no longer afford the second most expensive Medicaid program in the United States."

Commissioner of administration Michael Keathley said thousands of Missourians would lose their Medicaid benefits under the plan, but he couldn't say exactly how many.

Democrats quickly attacked Blunt for going back on a campaign pledge to oppose Medicaid reductions.

"To break a very clear promise you made during the campaign right out of the gate is not away to build trust with Missourians," said State Auditor Claire McCaskill, the Democrat whom Blunt defeated in November.

The governor's promise for aggressive action to enact key Republican proposals such as workers' compensation reform and an overhaul of Missouri's civil litigation system brought standing ovations from GOP lawmakers, who control both legislative chambers.

Democrats, meanwhile, sat in polite silence.

Blunt said changes are needed to reduce the costs of workers' compensation claims and lawsuits against businesses and doctors are vital to promoting economic growth in the state.

Nixon said the proposals would harm average Missourians while awarding corporations for their support of Republicans.

"We have created jobs during difficult times, and we can continue to create jobs," Nixon said. "But we cannot and should not succumb to runaway corporate welfare and giveaways that foster an Enron-like culture."