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Tornado highlights Mo. Rainy Day Fund issues

Tornado highlights Mo. Rainy Day Fund issues

May 26th, 2011 in News


Associated Press

JEFFERSON CITY, Mo. (AP) - Missouri has a $500 million reserve fund that can be tapped for disasters such as the deadly tornado that devastated Joplin or the floods that inundated southeast Missouri. But when tragedies coincide with tight times, the Rainy Day Fund can become almost impractical to use.

Leaders of the Missouri Senate and House suggested Thursday that they may need to ask Missouri voters to amend the state constitution to make it easier to get access to the money to help communities coping with and recovering from major natural disasters.

"It's good to have the fund, and it's good to have the money there in place," Senate President Pro Tem Rob Mayer, R-Dexter, told The Associated Press. But "the way it's set up, it almost works against using it."

The Missouri Constitution requires that an amount equal to 7.5 percent of the state's general revenues - or a little over $500 million - be maintained in a reserve fund. The money can be tapped to cover temporary cash flow needs, so long as it is repaid during the same fiscal year. Or, in cases where the governor has declared a disaster, lawmakers can agree to use up to half of the fund with the money repaid in three annual installments.

Missouri has only tapped the Rainy Day Fund for an emergency once, in 1993 when they approved $16 million to help recover from flooding along the Missouri and Mississippi rivers.

Since then, state officials have been reluctant to use the fund for fear that the repayments would add to the state's budget problems in coming years. The Senate appropriations chairman, for example, has warned that Missouri could face a budget gap of between $200 million and $700 million in its 2013 fiscal year.

"Obviously things are very tight moneywise at this time in our budget," Mayer said. "It makes it quite a burden to take money out of the Rainy Day Fund and then immediately have to turn around and pay it back in three years."

Gov. Jay Nixon pledged $25 million in state funds earlier this month to pay for the Missouri National Guard's deployment to floods in southern and southeastern Missouri and to help local governments with their response and rebuilding costs.

But instead of financing the aid through the Rainy Day Fund, Nixon plans to cut other parts of the budget.

There similarly are no plans right now to use the reserve fund for responding to the Joplin tornado, said Nixon's budget director, Linda Luebbering. But she said that could be discussed as the state gets a better handle on the costs for response and cleanup.

"If the Rainy Day Fund is going to be used for anything, incidents like the disaster in Joplin or the floods in southeast Missouri are probably a reasonable thing," said House Speaker Steven Tilley, R-Perryville.

Both Mayer and Tilley said they favor changing the constitution to allow money borrowed from the Rainy Day Fund for disasters to be repaid over a longer period of time - thus easing short-term pressure on the state budget. Such a change could not occur quickly. If approved by the Legislature, the constitutional amendment would have to be referred to voters in November 2012 or at an earlier special election if the governor chooses to call one.