"This is a downturn like none that we've ever seen in the past," Goode said in a statewide conference call with reporters on Tuesday morning.

The $340 million shortfall is a number based on a projection for June 2009, the end of this fiscal year. Goode says state revenues in November totaled $7.6 billion, a $623 million drop from estimates made in May.

The budget had assumed a 3.1-percent growth in general revenues. The state Office of Administration said Tuesday that net general revenues are down 3.9 percent through November, the fifth month of the state's fiscal year.

"It's changed significantly," Goode said of the state's revenue picture, blaming it almost entirely on the economic downturn.

Goode added the shortfall could "change up or down," and says there's a high level of uncertainty and unpredictability in this volatile economy.

Goode said Nixon is working on "efficiencies in the existing budget," and will announce his initial steps to control spending within the next few days. Dipping into the state's "Rainy Day Fund" for cash-flow purposes is on the table, according to Goode.

Nixon, a Democrat, takes over as governor Jan. 12. Nixon's transition team already has been working closely with the budget staff of outgoing Republican Gov. Matt Blunt.

Missouri's 2009 fiscal year started last July and runs until June. Goode says the $22.4 billion spending plan assumed the state would end the fiscal year with a $281 million balance.

The decline in state revenues is partly because of poor retail sales. Sales and use taxes were down 7.6 percent compared to the same period in the previous fiscal year.

Individual income tax revenues were up by 1.3 percent while corporate taxes fell by 13.6 percent compared to the same five-month period in the previous year.

“We all know that Missouri's best days are ahead of us,” Nixon told his supporters on Election Night.

Now, not quite one month later, Goode warns the bleak picture will present historic fiscal challenges.

Goode, Nixon’s leading budget advisor, says the governor-elect's options are difficult, including:
*withholding appropriations from the current budget;
*dipping into the rainy day fund for cash-flow; and
*identifying efficiencies, also known as spending cuts.

Just last week, Missouri State University announced it was taking precautionary measures in case of cuts.

“I think the forecast is that revenue is likely to be less than the state's budget. That doesn't necessarily translate into a budget cut for higher education and I certainly hope there isn't one. We'll try to make a very strong case that there shouldn't be a cut for higher education,” said MSU President Mike Nietzel.

“Change means helping more Missouri families realize the dream of a college education,” Nixon said during the campaign.

Nixon campaigned on more money for education but now the Department of Higher Education is asking universities to draft plans for core cuts of 15, 20 and 25 percent.

“I don't think anybody will be surprised if not only the university budget but budgets across the spectrum are going to see some reductions,” said state Rep. Shane Schoeller, R-Willard.

Schoeller says, without smart stewardship in the past, it could be much worse. Now everyone's hoping the projections are wrong and the revenue picture will get better soon.

“By the end of June, it could end up being we're close to where we need to be in the budget process,” said Schoeller.

Or it could be worse.

“Could be,” he said.

The next big indicator of our state's fiscal picture is December's consensus revenue estimate. That's due out within in the next week.
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The Associated Press contributed to this report.