Missouri state budget (2011-2012)

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Missouri faced an estimated $500 million budget deficit for fiscal year 2012, equivalent to $83 for each state resident.[1] Lawmakers passed a $23.2 billion operating budget for fiscal year 2012 on May 5, 2011.[2] Gov. Nixon signed the budget on June 10, 2011, but he first cut $172 million from the budget.[3] A summary of the budget bills from the Office of Administration can be accessed here.

The state's net general revenue collections grew 3.2 percent for fiscal year 2012, but they were lower than those collected in fiscal year 2008 and did not increase as much as revenues did in fiscal year 2011.[4]

When a mortgage foreclosure settlement between banks and states was announced in February 2012, Attorney General Chris Koster said that he planned to put $40 million of Missouri's mortgage foreclosure settlement money -- about 20 percent of the total $196 million that the state would receive -- into the general state fund.[5] Gov. Jay Nixon then said he planned to use nearly all of the state's $41 million settlement payment to offset some of the budget cuts he made earlier in the fiscal year, although he did not specify which cuts.[6]

In August, the governor restored $1.2 million of his prior cuts to programs for the elderly and children. He did so because of a 9.13 percent rise in state individual income tax collections in the prior 12 months, taking that as a sign that revenue growth was likely to continue through fiscal year 2012. The state's budget director said that it the state was on target to meet its budget growth figure, estimated at around two percent, despite a 0.9 percent decline in sale tax revenue.[7]

Natural disaster costs and the governor's authority

Following devastating tornadoes in Joplin, Missouri, the governor withheld $172 million in state funding, including $57 million in general revenue funds, for various programs in order to pay for disaster recovery. Missouri Auditor Tom Schweich filed a lawsuit against Gov. Nixon on August 26, 2011, alleging the governor violated the state constitution when he withheld the funds, saying that the process was not legal and not transparent. Republicans had commented that, after Nixon withheld the funds in June, the budget was more closely aligned with his original recommendations than it was when the legislature adjourned.[8]

On October 31, 2011, a Cole County judge heard arguments on whether the governor cut the state budget regardless of whether revenue was running short. The case was expected to focus on a provision in the Missouri Constitution that reads: "The governor may control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means, and may reduce the expenditures of the state or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based."[9]

Gov. Nixon's cuts

After the passage of the bill, Gov. Jay Nixon cautioned that he may have to make additional cuts because it spent at least $30 million more than he expected the state to receive in revenues.[2] Nixon made good on that threat on June 10, 2011, when he announced that he would cut $172 million in order to balance state finances and also help rebuild portions of the state damaged by natural disasters. State Budget Director Linda Luebbering said additional cuts may have to be made down the road depending on the cost of the disaster and future revenue projections.[10]

His cuts included:

  • $14.9 million from universities[10]
  • $1.9 million from community colleges[10]
  • $13.9 million to Medicaid[10]
  • $8 million for school buses[3]
  • $6 million to the judicial branch[10]
  • $3 million for college scholarships[3]
  • $2 million to corrections with management encouraged to use comp time and other tools to save money[10]
  • $800,000 million from the legislature's budget[10]

The cuts to universities and colleges matched those that Nixon first proposed in January, when he released his initial budget proposal. Overall, he cut 46 programs.[10]

Legislative budget

The legislature approved a $23.2 billion operating budget for fiscal year 2012 on May 5, 2011. The budget included a $1.1 million increase for the state's oversight of dog-breeding businesses and cut $1.6 million from state aid to conduct property assessments, which help set a property tax base for local schools. It also eliminated funding for the chef at the governor's mansion.[2] The budget phased out the corporate franchise fee, costing the state $24 million in fiscal year 2012.[10] The budget reduced state aid to conduct property assessments by $1.6 million.[11]

Education

Under the legislative version of the budget, K-12 public schools would receive $3 billion in basic aid, the same amount as the then-current year but $180 million less than what the state's school funding formula dictated. The budget provided $107 million for school transportation, which provides funding for busing, $45 million less than what schools were supposed to receive, but about $10 million more than what they actually got after Nixon's budget cuts.[11]

For higher education, the governor's budget plan would have reduced core budgets of colleges and universities by seven percent, but the legislative budget included a roughly 5.5 percent cut. For the second year, the primary college scholarship program would rely on the transfer of $30 million from the Missouri Higher Education Loan Authority, which services college loans.[11][2]

Initial House and Senate proposals

The Senate approved its state budget proposal, which totaled $23.2 billion, on April 20, 2011.[12] It kept basic school aid the same as the prior year's budget and restored part of the cuts that had been proposed for school busing aid and for public colleges and universities.[13]

The House approved its $23.2 billion version of the state budget.[14] The plan approved by the House was $700 million less than what the state planned to spend in fiscal year 2011 and $142 million more Gov. Nixon's proposed fiscal year 2012 budget.[15] The House budget provided $200,000 for the Film Commission, which was cut in the governor's version of the budget, added $200,000 more for Parents as Teachers and spent $2 million for a program at Missouri State University that aimed to bring more pharmacists to the area. The budget plan also allotted about $3 billion in basic aid for public schools in the upcoming academic year, the same amount they received in the prior year. [16]

Negotiations

Presumptive House Speaker Steven Tilley said Republicans would not support tax increases, meaning that the General Assembly would likely have to make $500 million in cuts to the budget.[1] Just under one third -- about $7.5 billion -- of the fiscal year 2011 budget came from "general revenue," or places where legislators were free to cut.[1] Most of the general revenue budget went toward health care or education.[1]

In his State of the State address on January 19, 2011, the governor said that he would reduce total state spending and, while keeping K-12 school funding the same, he planned to reduce aid to colleges and cut around 860 state employee positions.[17] In addition, the governor said he would either cap or eliminate the state's tax credit programs for businesses.[17]

Net general revenue collections in March for the fiscal year-to-date, starting July 1, totaled $4.98 billion, up 6.5 percent from $4.69 billion in the same period in the prior year, according to numbers from the Missouri Office of Administration.[18] The state had the potential to miss out on as much as $190 million in revenue over fiscal year 2011 due to federal tax changes and because the state's tax laws were linked, or "coupled," to federal tax rules for business purchases.[19]

Governor's proposed budget

Gov. Nixon proposed a $23.1 billion operating budget on January 19, 2011. The governor's spending proposal broke down as follows:[20]

Conservation: $146 million, $146 million
Category Proposed spending for FY2012 Budgeted spending for FY2011
Public debt $48 million $77 million
K-12 education $5.36 billion $5.15 billion
Higher education $1.23 billion $1.11 billion
Revenue $432 million $441 million
Transportation $2.63 billion $2.24 billion
Administration office $287 million $251 million
Employee benefits $900 million $821 million
Agriculture $42 million $49 million
Natural resources $310 million $310 million
Economic development $257 million $258 million
Insurance $38 million $40 million
Labor $112 million $112 million
Public safety $524 million $542 million
Corrections $660 million $661 million
Mental health $1.2 billion $1.24 billion
Health, senior services $921 million $955 million
Social services $7.66 billion $8.17 billion
Elected officials $112 million $107 million
Judiciary $190 million $190 million
Public defender $38 million $38 million
Legislature $34 million $33 million
Real estate $148 million $150 million
Total $23.27 billion $23.09 billion

References

  1. 1.0 1.1 1.2 1.3 The News-Leader, "State's budget deficit presents difficulties" Jan. 2, 2011
  2. 2.0 2.1 2.2 2.3 Forbes, "Missouri lawmakers pass $23B budget for next year," May 6, 2011
  3. 3.0 3.1 3.2 St. Louis Public Radio, "Nixon signs, and cuts, FY2012 Mo. budget," June 10, 2011
  4. The Missouri Budget Project, "Missouri General Revenue Report, FY 2012 Summary," July 31, 2012
  5. The Huffington Post, "National Mortgage Settlement: Some States Using Mortgage Deal Funds To Close Budget Gaps," February 10, 2012
  6. CBS MoneyWatch, "States diverting foreclosure settlement funds," March 14, 2012
  7. Missouri News Horizon, "State Revenues Rise, Governor Restores Some Cuts," August 4, 2011
  8. The St. Louis Post Dispatch, "Tom Schweich sues Jay Nixon over budget decisions," August 27, 2011
  9. St. Louis Today, "Court case could settle constitutional fight over budget cuts," October 31, 2011
  10. 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 St. Louis Today, "Jay Nixon cuts millions from state budget," June 11, 2011
  11. 11.0 11.1 11.2 Businessweek, "Missouri lawmakers pass $23B budget for next year," May 6, 2011
  12. Cite error: Invalid <ref> tag; no text was provided for refs named senate
  13. Businessweek, "Missouri Senate may take up state budget proposals," April 18, 2011
  14. OzarksFirst.com, "Missouri House Gives Final Passage To State Budget," March 30, 2011
  15. Businessweek, "Mo. budget panel backs Nixon on K-12, universities," March 16, 2011
  16. The News Leader, "Budget submitted with major shortfalls," March 16, 2011
  17. 17.0 17.1 Bloomberg, "Nixon touts jobs even with state budget shrinking," January 20, 2010
  18. Missouri Watchdog.org, "Missouri lawmakers on track to reduce spending," April 4, 2011
  19. Forbes, "Analysis: Tax change could affect Mo. budget," May 2, 2011
  20. The News Tribune, "A look at Gov. Nixon’s proposed Missouri budget," January 19, 2011
[[[Category:2012 archived state budgets]]