The Governor's Budget Plans
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The Governor's Budget Plans

Date: January 28, 2013
By: Marie French
State Capitol Bureau
Links: The governor's budget proposals, the governor's higher education spending pland and the bond issue bill, HJR 14.

JEFFERSON CITY - During his State of the State address, Gov. Jay Nixon presented his new budget, emphasizing increases for education, mental health and Medicaid expansion.

Nixon’s budget proposal puts additional revenues from a recovering economy to work by increasing funding for all levels of education by more than $150 million and allocating money for mental health services.

His proposal included a 2 percent raise for all state employees, which would cost about $27.4 million, and eliminated 190 positions in state government.

Nixon called for a $100 million increase in K-12 education funding. Included in the increase was $66 million toward the state’s foundation formula – the primary means by which the legislature funds elementary and secondary education. The formula, however, was underfunded last year by about than $300 million.

“Education is the best economic development tool there is,” Nixon said.

Republican leaders, however, expressed concern about the size of the increase in spending.

“I believe the governor proposed one of the largest if not the largest state budgets ever,” said House Speaker Tim Jones, R-St. Louis County. “We’re going to have to go through this budget line by line and see where all this spending is.”

Senate President Pro Tem, Tom Dempsey, R-St. Charles County, reserved detailed comment on the budget.

“He put forward a number of new spending programs,” Dempsey said. “I’ll have to see the details of how he balances his budget.”

The budget covers the fiscal year that will begin July 1. In total, the governor's budget plan would expand the state's total spending by 6.9 percent -- or $25.7 billion dollars.

The departments of Social Services, Mental Health and Public Safety would receive some of the largest percentage increases.

Revenue that relies on legislative action

Nixon’s budget relies, in part, on legislative approval of measures to increase state revenues that have failed in past legislative sessions including reducing tax credits for developers, expanding sales tax collections on Internet sales from non-Missouri sellers and providing amnesty for persons who pay the state back taxes. In total, the governor's budget would require passage of a package of legislation totaling about $160 million.

The chairs of both the House and Senate budget committees questioned whether the governor's budget was balanced.

“The governor is proposing adding $164 million on legislation that has to pass the General Assembly,” said House Budget Committee Chair Rick Stream, R-St. Louis County. “None of them have passed the legislature in the past.”

Senate Appropriations Chair Kurt Schaefer, R-Columbia, flatly said the budget was not balanced. "Obviously it's not if it relies on $165 million of legislation that has to pass. Because if that legislation doesn't pass, then obviously the governor's budget doesn't work."

Some of the revenue growth also would come from the governor's proposal to expand Medicaid with full federal funding because the additional health-care workers would pay state income taxes.

But both Dempsey and Jones questioned Medicaid expansion because of uncertainty about how much the state ultimately would have to contribute to continue the program for higher-income Missourians.

Nixon endorses bond issues

The governor announced his support for a bond to pay for infrastructure improvements. That money would go to build science and technology building on college campuses, replace some Fulton State Hospital facilities and to state parks to draw more tourists.

Jones already had sponsored a bond issue proposal, but Nixon added a condition -- cuts in the more than $600 million the state loses in tax credits to developers and various activities.

“I will couple it and say that meaningful tax credit reform will pay for it,” Nixon said.

Jones created a committee chaired by Rep. Chris Kelly, D-Columbia, to explore this bond idea.

“That’s another area of common ground,” Jones said. He said he didn’t think it would be coupled with tax credit reductions in the House.

“I think you run into a lot of problems in this legislature when you start tying things together,” Jones said. “I’d rather not do business that way.”

Jone has sponsored a bill for a $950 million bond issue. The governor did not cite a specific figure. Any bond issue would require statewide voter approval.

Investing in education

Early childhood education programs would get an additional $18.5 million, more than doubling the money available for the Missouri Preschool Program, increasing Early Head Start funds and restoring funding eliminated last year to assist child-care providers in getting accredited.

“The clear consensus? Early childhood education is a smart investment for the big return,” Nixon said. “We want every child in every Missouri community, no matter their family’s circumstance to get the best possible start.”

Higher education institutions would get a 3 percent increase with the increase tied to new performance standards.

“We’ll tie new funding to specific performance goals like increased student retention,” Nixon said.

Jones said he sees some common ground on education reform, but expressed disappointment by Nixon’s failure to address problems in St. Louis and Kansas City school districts.

Merit-based scholarships such as Access and Bright Flight also receive $75 million in Nixon’s budget, which is unchanged from the previous year. Funding to the A+ Scholarship Program is increased by $1 million to expand access across the state.

“That will allow that every student who qualifies for the A+ program regardless of where they attend high school will be able to receive the scholarship,” said Nixon's budget director, Linda Luebbering.

Stream said he didn’t think $1 million would be enough to make the A+ program statewide because of the program’s structure and interest from students.

“You’re going to find a lot more to take advantage of it,” Stream said.

In addition to traditional education, Nixon’s budget also increases education funding for workforce training by $2 million.

“Investing in worker’s skills – that’s real economic development,” Nixon said.