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Budget Battles May Consume Missouri Legislators Even More In Coming Session

New numbers show Missouri's women who worked full-time earned about 78 percent of men's earnings in 2013.
(via Flickr/Tax Credits)

Gov. Jay Nixon’s recent public tour of the damaged sections of the Missouri Capitol appeared to be aimed, in part, at making it clear that he recognizes repairs are needed – even as he continues to withhold repair money allocated in the current state budget.

Nixon also may be attempting to repair his strained relations with legislative leaders, as his administration and the General Assembly launch into a new round of negotiations and maneuverings to craft a new state budget for the next fiscal year (FY2016).

On Thursday, the two camps announced that they had reached consensus on the estimated growth and will base the new budget on projected increased state income of 3.6 percent.  The only battle remaining is how that money will be spent.

On the surface, Jefferson City's budget battles can appear to be dry affairs that center on numbers and bean-counting.

But in truth, the state’s annual fiscal fights affect most of the major aspects of Missouri life – from how much state aid goes to the local public schools to how much money is earmarked for health care, the elderly and poor children.

The state budget also figures in the wrangling over tax cuts and tax credits.

Even without all that, this legislative session’s focus on money would be noteworthy for two reasons:

  • The budget crafted for the coming fiscal year, which begins July 1, will be the last one before tax breaks approved last session begin to kick in.
  • The new budget will be the first assembled since Missouri voters on Nov. 4 approved Amendment 10, which curbs the governor's budget powers. Among other things, legislators will have the power to block his budget withholds and overrule his line-item vetoes in budget bills.

Amendment 10 likely to fuel more fights

Legislators did vote during September’s veto session to override some of Nixon’s spending vetoes in the current budget, but the General Assembly may not have had the power to do so. With Amendment 10’s approval, that’s no longer in dispute. And with Amendment 10 in mind, legislative leaders already are taking steps to change the budget-approval process.

The state constitution requires lawmakers to get a budget to the governor no later than the first Friday in May. But for the coming year, legislative leaders are setting their own target date: by the third week in April.

If the governor has the budget earlier, he will have to take action before the General Assembly adjourns in mid-May – giving lawmakers time to vote to overrule him.

“He needs to sign what he’s going to sign and veto what he’s going to veto,’’ said state Rep. Sue Allen, R-Town and Country. She sits on the House Budget Committee and heads the House panel that appropriates money for most social service agencies.

As an example of legislators affecting what had been gubernatorial discretion, Allen is among the Republicans who plan to challenge Nixon on his recent unilateral decision to shift money in the current budget away from other social-service agencies to pay for his new Office of Community Engagement, headed by former state Sen. Maida Coleman, D-St. Louis.

Nixon will need legislative approval for that office’s funding in the new budget for the next fiscal year (FY2016).

The constitution requires that Missouri government end each fiscal year with a balanced budget, and the responsibility falls on the governor – who has the power to make last-minute cuts, if necessary.

Amendment 10, however, may force the governor to make unwanted budget cuts if the General Assembly blocks his preferred trims.

Disagreements remain over current budget

This week's agreement on the estimated general-revenue increase in the coming year will be used as the basis for crafting a budget.

But as it stands, the two sides also have another – more immediate – fiscal conflict. Even though the current fiscal year (FY2015) is almost half over, the governor and Republican legislators remain at odds over parts of it.

Nixon withheld or line-item vetoed about $1.2 billion from the budget that legislators sent him last spring. He blamed, in part, a series of tax breaks that legislators approved during the final hours of this year’s legislative session. The governor vetoed most of them. During the veto session this fall, the General Assembly reinstated only a couple of the tax breaks.

Nixon has released some of the withheld money, but he may have to recapture some of that cash if the state’s revenue continues to grow more slowly than planned.

Current revenue growth is below projections

The current state budget totals $26.2 billion. But legislators and the governor really have control of only about $8.3 billion – known as the “general revenue’’ portion of state spending.

The other $17.9 billion in the state budget represents dedicated money over which officials have no control (such as the Department of Conservation’s special sales tax) or federal money (such as Medicaid) that simply passes through state government to recipients.

Of the $8.3 billion, the largest share -- about 36 percent – goes for elementary and secondary education. Another 10.7 percent goes for higher education. The rest is spent on social services, corrections and public safety or for operations of the judiciary, the General Assembly and the elected statewide offices.

The fiscal 2015 budget, as implemented by the governor,  is based on projected general-revenue growth of about 5 percent over the previous fiscal year. But so far, the actual general revenue has hovered below 4 percent. 

Nixon's budget team contends that the budget approved by the General Assembly last spring relied on a projected income increase of more than 10 percent, when the last-minute tax breaks are included. Legislative leaders dispute that figure, saying their projected growth estimate had been just over 4 percent, which they emphasize is closer to the actual increase so far.

Linda Luebbering, the state budget director, says the administration is hoping the next six months will see stronger growth in order to meet the governor's 5 percent increase projection. So far, Nixon has not withheld any additional money that had been budgeted for spending.

But he might have to make any needed extra trims in the coming months, setting up more budget confrontations with the General Assembly while it’s in session.

Nixon’s proposal for a bond issue to pay for repairs to the state Capitol would likely be considered at the same time. Luebbering contended that bonds may be the best way to raise money to pay for the repairs, without tapping the “scarce resources’’ needed for current or future state budgets.

Jo Mannies is a freelance journalist and former political reporter at St. Louis Public Radio.