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Health & Fitness

European Recession Could Hurt St. Louis Region

If Europe dips into a recession, the St. Louis region may feel the impact. Plus, Missouri will save $3.6 million by refinancing debt, and why a comma matters when it comes to budget appropriations.

With everything going on around the region, let alone across the state or country, it is difficult to find time to follow developments in Europe.

The financial crisis underway in the eurozone, however, may hurt the economy here at home if the European Union falls into a recession, according to research by Wells Fargo Securities.

The economists examined the exports by state to Europe, noting 1.97 of U.S. gross domestic product is dependent on exports to Europe.

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While some states rely on exports to Europe more than others, Missouri is relatively low at 0.96 percent and Illinois is higher at 1.55 percent.

"With more states continuing to struggle with the effects of the sluggish U.S. economic recovery, the prospects of some additional challenges as the European Union slips back into recession over the next couple of quarters represents another hurdle," according to the research.

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Missouri refinances $20 million in bonds

While sovereign credit ratings are getting hit in the eurozoneMissouri continues to keep its AAA credit rating from all three major rating agencies, allowing the state to save millions by refinancing.

The Missouri Office of Administration announced the refinancing of series 2001 bonds will save the state $3.6 million over the life of the issues. The state issued $20.1 million in Health and Educational Facilities Authority Refunding Revenue Bonds to refund $22.7 million of outstanding bonds.

The funds received a notch lower rating than the state's general obligation bond rating from the three agiencies, reflecting the need for annual legislative appropriation to finance the payments.

Nine firms placed a bid for the bonds backed by Missouri during the competitive bidding process, with Jefferies & Co. Inc. prevailing as the winning bidder at an interest rate level of 1.97 percent.

Schweich vs. Nixon

While Missouri Gov. Jay Nixon can continue to go around the state touting the state's AAA credit rating, he will still be facing a court battle set to get underway regarding the appropriation process.

A judge denied the governor's motion to dismiss the lawsuit brought in August by Missouri Auditor Tom Schweich, who alleges Nixon violated the Missouri Constitution by withholding funds.

Schweich praised the judge's ruling, while Nixon's staff released a statement pointing out that the procedural ruling has no impact on the governor's constitutional responsibility to balance the budget.

"These powers are established by the constitituion and have been available to and used by governors in the past," said Sam Murphey, communications director for the governor.

The case will likely hinge on one comma in Article IV, section 27 of the Missouri Constitution.

By Brian R. Hookbrhook@brhook.com, (314) 482-7944

Hook is editor of Missouri Journal, which covers the economy across the Show-Me State. For more Missouri news, sign up for a newsletter and follow Missouri Journal on Twitter and Facebook.

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