Last week the Missouri Senate approved its FY16 budget, sending all thirteen appropriations bills back to the House for their consideration. The Missouri House moved quickly, voting to send twelve of the appropriations bills to conference. Now a joint conference committee made up of House and Senate members will attempt to negotiate the variances between the two chambers, most of which can be resolved rather easily. However, there seems to be one major area of disagreement, and it is centered on funding for the Departments of Social Services, Health, and Mental Health. On this issue, the Senate is trying to address the year-to-year growth of these agencies, because they are consuming most of the state’s resources, thereby limiting money for other needed areas of funding in the state.
In putting together the House budget, the House used the usual method of budgeting by funding lines for each specific program within these three departments. The Senate deviated from the traditional use of line items and instead used a lump sum method of budgeting for these departments. This method would give each of the three a “pot” of money to spend as they wish, with no lines designated for each of their individual programs. To reach their goal of slowing the growth of the agencies, the Senate, under their proposal would cut the total appropriations to them by four to six percent. In making cuts, they projected there would be approximately $130 million available for other needed state priorities, such as increasing education funding.
In the House budget, K-12 education was increased $74 million and higher education was increased $12 million. Under the Senate’s budget proposal, they added an additional $10 million to K-12 education and $27.6 million more to higher education. While there is good support for finding extra money for education, many Missourians are beginning to voice their concerns over cutting money to the Departments of Social Service, Health, and Mental Health. Perhaps the concern most frequently expressed by House members deals with the additional authority that would be given to department bureaucrats regarding lump sum appropriations, appropriations that have no fiscal oversight in place as does the line-by-line method. With lump sum funding, the departments could, in theory, spend more money earlier in the year and then experience a shortage toward the latter part of their year. Furthermore, these agencies haven’t been spending all their allotted money, yet they continue to ask for increases.
Missouri’s general revenue for FY 16 was expected to grow at a rate of 4.6%; today’s projection has increased to 6.1%, which translates into an anticipated growth of approximately $80 million of new revenue, revenue that can be used to improve the overall financial conditions of the state.
In addition, last week a tax amnesty bill passed out of the House and the Senate and was sent on to the governor. It is believed that the tax amnesty could generate approximately $60 million more in state revenue. Missourians who are delinquent in paying their taxes could settle their state tax accounts without facing penalties or interest. The bill would set up a period between September 1 and November 30 when these delinquent accounts could be paid off. The bill would then require those who utilized this amnesty period to comply with all state tax laws for a period of eight years. While some oppose this amnesty bill, saying it gives an unfair advantage to those who were slothful in paying their tax obligations, others see it as a way to collect needed revenues.
These two measures—the projected growth of state revenues and the tax amnesty proposal—will help support the budgeting process in our state by giving us additional monies with which to work. As we continue to focus on budgeting issues, we want to be especially respectful of our state’s taxpayer’s dollars and be thoughtful and prudent in the use of those funds.