July 2017 e-Newsletter

THE BUDGET REALITY

On June 30 Governor Eric Greitens signed the bills into law that make up the $27.75 billion state operating budget for the 2018 fiscal year. The FY18 budget contains approximately $450 million in cuts compared to the FY17 budget. In addition to these cuts, the Governor unilaterally imposed about $250 million in spending restrictions he said are needed to put the budget in balance due to lowered expectations for revenue collections in the coming fiscal year.

Public higher education took the biggest hit from Greitens’ cuts. While the budget the Republican-controlled General Assembly passed this spring called for cutting operational funding for colleges and universities by 6.5 percent compared to FY 2017 appropriations, Greitens withheld a total $24 million to bump the reduction in funding to 9 percent. Greitens also eliminated an additional $12 million in funding for cooperative programs primarily involving the University of Missouri System for a total hit of $36 million to higher education.

Other major cuts the governor imposed include $47 million for maintenance of state buildings, $30 million in unspecified spending at the Missouri Department of Social Services, $15 million in assistance for local public school districts’ student transportation costs, and $10 million for the state Division of Tourism.

Further, Greitens vetoed a proposed work-around bill that would have avoided cuts to in-home and nursing home services for about 8300 persons with disabilities. Because of his veto those cuts remain in place, as do $400,000 in foster care services and nearly $2M for youth residential treatment facilities. More than 63,000 seniors are losing their drug co-pay assistance as they no longer qualify under further restricted income guidelines. State workers, with no general wage increase, remain the lowest paid in the nation.

Withholdings can be reversed later in the fiscal year if, in the governor’s assessment, the state’s financial outlook improves. The likelihood of this happening remains seriously in question.

Greitens also made three line-item vetoes to the budget bills to eliminate more than $38.1 million in spending authority. However that spending authority resulted from the legislature attempting to move items on-budget that traditionally have been off-budget––the inmate canteen fund at the Department of Corrections and the spending for the Environmental Improvement and Energy Resources Authority. As a result, those vetoes should have little actual impact on state operations.

Clearly having an impact, however, is the governor’s allowance for a bill repealing a St. Louis minimum wage law to be enacted without his signature. That impact will be felt by minimum wage earners who will see their $10/hr wage fall back to $7.70 on August 28 when the law takes effect.

Early prognostications regarding the FY19 budget do not bode well. Missouri will likely see the second year implementation of SB 509, the tax-cut bill passed during the 2014 legislative session that will carve out $620M in state revenue as part of a five-year reduction in income tax rates, triggered by annual revenue growth of at least $150M. The second year implementation of this bill in FY19 will further reduce the amount of general revenue funds available, adding to the 60% decline in corporate tax revenue since 2015.

Make no mistake: these massive cuts and withholds are a direct result of failed tax policies, mimicking the failed Kansas experiment, that place wealthy special interests above hard-working Missourians. Special-interest tax cuts––glossed over by assertions of slow revenue growth and rising healthcare costs––have blown a hole in the state budget and it will not improve until an informed citizenry pushes back and demands substantive reform.

We in the legislative super-minority cannot do it alone.

The power lies in your hands and with your vote.

 

Background articles:

http://www.columbiamissourian.com/news/higher_education/tax-revenue-shortfalls-could-mean-more-cuts-for-mu/article_43d3f5c8-5c21-11e7-b7f5-87135ce0a464.html

https://www.usnews.com/news/best-states/missouri/articles/2017-06-30/missouri-governor-signs-budget-cuts-250m-in-spending

http://www.kansascity.com/news/politics-government/article159167244.html

http://www.stltoday.com/opinion/editorial/editorial-enjoy-this-year-s-missouri-budget-cuts-wait-ll/article_2fae65a3-c2f7-5155-966e-8911c497e994.html

http://www.stltoday.com/news/local/govt-and-politics/greitens-cuts-million-in-spending-signs-missouri-s-budget/article_a9b2825a-8381-5a5f-b54a-bd48e7883fd3.html