The wide-ranging cuts will reduce busing aid to public schools, Medicaid payments to some health-care providers, and subsidies to the arts and humanities. Grants for life-sciences research will be eliminated, funding for the state’s online school will be halted during the second semester, and no new clients will be accepted for certain mental health-care services.
“These restrictions have become necessary due to declining state revenues caused by the ongoing national economic downturn,” Nixon said at a Capitol news conference.
The latest round of cutbacks raises the total eliminated by Nixon to $634 million out of $23.7 billion approved by lawmakers for state operations and capital improvements during the current fiscal year. About 2,300 full- and part-time state employee positions now have been eliminated, either by the Nixon or legislators.
Nearly all states are struggling financially because of sharp declines in income and sales taxes caused by high unemployment rates and falling consumer spending during the recent recession.
Missouri revenues were down 10 percent through the first quarter of its budget year, which began July 1. Nixon said that revenues are expected to improve but still likely will end the fiscal year more than 5 percent below last year, marking a second straight year of decline. More budget cuts remain a possibility in future months, he said.
House Budget Committee Chairman Allen Icet, R-Wildwood, said some of the cuts announced by Nixon appear to be prudent, though he added that he hates to see that children could lose access to an online education during the middle of the school year.
Nixon, a Democrat, and Republican legislative leaders alike have ruled out tax increases as an option for balancing the budget. But some advocates for the poor said the latest spending cuts dig too deep into state services–and it’s time for Missouri to consider boosting state revenues.
“These cuts have real meaning for Missourians,” said Amy Blouin, executive director of the Missouri Budget Project, which analyzes fiscal policies for their affects on the poor. “They mean waiting lists for critical mental health services, a reduction in health-care reimbursements, fewer mentoring programs for children, and a loss of jobs at a time of already high unemployment.”
Even though education and health care are affected by the latest cuts, Nixon stressed that there is no reduction in basic aid for public K-12 schools, colleges, or universities and no eligibility restrictions for Medicaid recipients.
He said students still could take online classes through the state, but only if local districts paid for it.
In Michigan, the state’s bipartisan State Board of Education urged Democratic Gov. Jennifer Granholm and lawmakers to find money to reduce cuts in public education and buy time for a long-term funding solution.
The 8-0 vote on Oct. 26 came after a series of blows delivered to public schools last week. Granholm signed an education budget that contained a cut of $165 per student, but she also vetoed $51 million in extra funds for 39 wealthier districts and ordered another $127 per-pupil cut for all districts because of falling tax revenue.
The reductions will take effect unless more money is raised within a month.
The board heard from superintendents, former legislators, and others in the public. Yet it was the testimony of three economic experts that prompted optimism that money for schools could be found if the political will existed.
The experts, who have different political backgrounds, agreed Michigan should lower its 6-percent sales tax but tax services that are exempt now, such as entertainment and landscaping.
“There was really agreement or consensus about the need for long-term restructuring of the tax system,” said Board President Kathleen Straus, stressing that schools also must cut costs by consolidating transportation and other operations among districts.
Granholm and the Legislature tried taxing some services during a budget crisis in 2007 but reversed themselves following backlash from businesses that would have been affected. Consumers are generating less sales tax because they are buying fewer goods, which are taxed, and more services, which are not.
In Colorado, Gov. Bill Ritter, a Democrat, laid out his plan to cut another $286 million from the state budget on Oct. 28, including reductions in Medicaid provider rates and $145 million from higher education. The cuts come on top of the $1.8 billion budget shortfall the state already has covered over the past year.
The cuts to higher education will be covered by federal funds this year, but the governor’s office warned those funds will not be available next year and colleges and universities might be hard hit if new money is not found by then.
It was the second time this year that Ritter has been forced to cut this year’s budget, which ends in June, and the governor’s office warned more cuts may lie ahead.
“We’re managing the state’s economy in the worst fiscal crisis since the Great Depression, and this isn’t a one-time hiccup or temporary blip. This is a massive correction. It is a new economic reality for all of us,” he told lawmakers on the Joint Budget Committee, which sets the state’s spending priorities.
On Nov. 2 and Nov. 6, the governor will present his budget for the next fiscal year, and even deeper cuts are expected.
Meanwhile, Arizona faces the prospect of large-scale teacher layoffs next year as a result of the state’s budget problems, state Superintendent of Public Instruction Tom Horne said.
Horne offered his assessment after a state Board of Education member noted that the state now faces a projected $2 billion midyear budget shortfall and a $3 billion shortfall for the next fiscal year.
The situation is “much grimmer” than most Arizonans realize, Horne told the board.
“I think the public will be very, very upset about that,” he said, referring to the possibility of more teacher layoffs.
Board member Jaime Molera said Arizona should keep pushing accountability and achievement goals but consider relaxing some mandates on school districts to help find savings in the face of likely budget cuts.
The big shortfalls likely will prompt legislators to “take additional action even on the K-12 budget,” said Molera, a former state superintendent.
In Hawaii, public anger is rising over teacher furloughs that began Oct. 23 and will continue on nearly every subsequent Friday through mid-May. The furloughs are intended to help the state address a budget shortfall estimated at $1 billion or more over the next 20 months.
Neil Abercrombie, the 10-term Democratic U.S. House member representing most of Honolulu and a candidate for governor, has declared Hawaii’s schools to be in “an acute education crisis,” adding that furloughs would “rob” 17 days from children’s school year.
On Oct. 27, Abercrombie said U.S. Secretary of Education Arne Duncan was continuing to look federal money that can be used to retain a full school year in Hawaii.
In the meantime, the congressman said Gov. Linda Lingle, the Hawaii State Teachers Association, state Department of Education, and state Board of Education should stop finger-pointing and settle on a solution that halts furloughs.
Among the ideas he’s heard discussed are extending the school day and bundling furlough days at the end of the school year, Abercrombie said.
“It’s clear to me that everybody would like to restart this decision,” he said, noting that Lingle last week expressed regret for signing off on the new teacher contract.
AASA survey, “One Year Later: How the Economic Downturn Continues to Impact School Districts” (PDF)