Gov. Blunt's Responsible Budgeting Carries Rainy Day Fund To $555 Million

Press Release

Gov. Blunt's Responsible Budgeting Carries Rainy Day Fund To $555 Million

Gov. Matt Blunt's efforts to control state spending and carefully manage Missouri taxpayers' money has carried the Budget Reserve Fund, commonly called the Rainy Day Fund, to $555.3 million.

"My administration did something unusual in government, we did not spend every penny of the taxpayers' money," Gov. Blunt said. "Instead, we set priorities for the future turning a $1.1 billion deficit into three surpluses in a row and setting aside unprecedented savings to benefit Missourians' long term goals. These spending decisions have placed Missouri on steady financial ground despite severe national economic and global credit challenges and ensured that both required reserves and additional savings are available for future priorities. Unlike other states, smart money management in Missouri has kept us from the massive withholdings that are occurring just to make ends meet during the current fiscal year."

Gov. Blunt has set aside the largest ever Rainy Day Fund reserve every year he has been governor, and has never suggested that the state tap into the fund. Because Missourians share Gov. Blunt's understanding of the importance of saving, our state's constitution requires that 7.5 percent of net general revenues be set aside into the Rainy Day Fund, which is essentially an emergency savings account for the state. The balance is adjusted annually to ensure the fund remains at 7.5 percent of net general revenues.

Since the governor took office, the Rainy Day Fund balance has grown by more than $90 million to reach its current $555 million balance, higher than ever before in state history. The last time the fund was used was during the floods of 1993 and Gov. Blunt has said he believes that with rare exception it should be reserved for natural disasters. One example Gov. Blunt identified as a potential reason to use the fund would be if there was a massive and catastrophic earthquake on the New Madrid Fault.

In addition to setting aside the largest ever constitutionally required Rainy Day Fund every year he has been governor, for the last two years Gov. Blunt has also left more money in the bank than ever before in the state's history. Missouri began this fiscal year with a large $835 million surplus, a significant portion of which the governor had set aside in past budgets to ensure it was available for Missouri's future needs. Much as Missouri families set aside savings for retirement, long term goals, or unanticipated expenses the governor's Fiscal Year 2008 budget left $200 million in the bank, the highest ever savings balance in history. Gov. Blunt's 2009 budget also ensured a portion of the state's revenues were saved instead of spent.

As noted in July, based on the Consensus Revenue Estimate agreed to by the House and Senate, Missouri would end the year with $340 million. While it is clear that any anticipated Fiscal Year 2009 ending balance will be much reduced, the large beginning balance Gov. Blunt secured will reduce the need for drastic spending changes in Fiscal Year 2009. Without Gov. Blunt's fiscal discipline that created this planned surplus, Missouri's budget would be facing a severe shortfall. The state has been able to use the surplus as revenues have declined.

When he took office in January 2005, Gov. Blunt inherited a $1.1 billion budget deficit. Gov. Blunt reined in spending, eliminated waste and fraud, cut taxes three times and posted three consecutive surpluses.

It is his responsible planning that has ensured while other states are taking drastic action, cutting K-12 education, eliminating jobs, delaying school construction, setting aside prison construction plans and considering tax increases, Missouri remains on solid financial ground, and has sufficient access to money needed to pay the bills and support Missourians' priorities.

Pro-job, pro-growth policies joined with smart money management have allowed the governor to cut taxes for Missouri families, increase services, and turn a $1.1 billion deficit into three consecutive budget surpluses. Gov. Blunt has made growing Missouri's economy and expanding opportunities to Missouri's working families a high priority. Since January 2005 Missouri's employers have built on pro-jobs, pro-growth policies and added tens of thousands of new jobs. Successful legislation like workers' compensation and lawsuit reforms helped level the playing field for job creators. The Missouri Quality Jobs Act is helping create jobs that pay good wages and that provide health care benefits for employees.

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