Missouri budget spends more despite flat revenues

05/11/2014 11:33 AM

05/11/2014 11:34 AM

Missouri tax revenues have been falling in recent months. Yet spending is on the rise in the Missouri Legislature.

The 2015 budget, which won final legislative approval this past week, includes hundreds of spending increases for everything from schools to prisons. There’s new money for iPads, heart defibrillators, buildings and the eradication of pesky fish.

The number of new spending items included in the 2015 budget is nearly one-third higher than the current year, according to an analysis prepared by the Senate Appropriations Committee at the request of The Associated Press.

In summation: There has been an increase in the instances of increased spending.

This, from a Republican-led Legislature that has generally denounced the growth of government, and at a time when revenues have been falling short of projections. Yet legislative leaders remain outwardly confident that everything will work out.

“We put together a budget that we felt was accurate with the revenue estimates we had at the time, and we still believe that will come true,” said House Budget Committee Chairman Rick Stream, a Republican from Kirkwood.

The reasons for Missouri’s spending surge date back to last summer, when Missouri ended the 2013 fiscal year with a surprising 10 percent growth in state revenues. That meant the state started the 2014 budget with more money than expected in the bank, which fueled discussions of how to use it.

Lawmakers then met with economists and members of Gov. Jay Nixon’s administration in December – as they do each year – as the first step in deciding how much money to expect for the 2015 budget. But unlike most years, there was no agreement.

Legislators projected that the state would end the current fiscal year in June with 2 percent growth and see an additional 4.8 percent rise in revenues during the annual budget year that starts July 1. Legislative leaders said they were being realistic. Nixon said he was more optimistic. The governor forecast revenue growth of 2.8 percent this year and an additional 5.2 percent growth for the 2015 budget.

“Right now, both of us are wrong,” Stream acknowledged this past week.

State revenues have fallen in three of the past four months and, as of the end of April, were up just 0.5 percent through the first 10 months of the 2014 budget year.

Senate Appropriations Committee Chairman Kurt Schaefer cited the uncertain revenues as one reason why lawmakers opted for long-term debt to finance a new mental health hospital in Fulton instead of short-term bonds that would have required substantially higher annual payments.

“We’re being very cautious watching revenues right now,” said Schaefer, a Republican from Columbia. Yet he also touted “a massive increase of real money” for public schools in the 2015 budget – up nearly $115 million over the current budget.

The 2015 operating budget contains 332 “new decision items,” which include spending increases for existing programs as well as entirely new initiatives, according to the Senate Appropriations Committee. That’s up from 252 “new decision items” in the 2014 budget.

More than 100 of those “new decision items” were in play as House and Senate negotiators met this past week to resolve differences between budget versions previously passed by the two chambers. Lawmakers opted for the larger dollar figure on those new spending items about three times as often as they picked the smaller amount, according to an AP tracking of the budget negotiations.

Even with those spending increases, the budget still is smaller than the one originally proposed by Nixon. It now will be up to Nixon to decide whether to cut any of the legislative spending proposals.

House Speaker Tim Jones called the Legislature’s final product “a true balanced budget” that reflects “careful fiscal planning and stewardship.”

Rather than pare back spending because of the recent downturn in revenues, Stream said lawmakers chose to base the budget on the revenue projections they developed during the winter.

“Most people … believe that the economic situation is going to be improving,” Stream said. “And I hope it does.”

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