How Parson wants to handle record revenues: 5 takeaways from his State of the State

Missouri Gov. Mike Parson brought big money to his annual State of the State address Wednesday, a $47 billion budget proposal supported by record revenues and billions in federal aid. How he wants to spend it will be a high-priority item for debate in the Republican-dominated General Assembly this year.

Here are five takeaways from the governor’s speech.

Missouri has much to spend, thanks to Joe Biden.

Parson rolled out a massive spending blueprint supported by record tax collections and an influx of $2.7 billion in federal aid from the American Rescue Plan.

But that put Parson in a tricky spot — with the Republican governor trying to take credit for investments that are only possible because of a law signed by a Democratic president.

He was careful not to credit the Biden administration, instead attributing the state’s fiscal health to a strong economy and his refusal to impose COVID-19 business restrictions. He took a dig at the federal law even as he was eager to talk about the largesse it brings to the state.

“I want to remind you that our economy is strong despite federal funding,” he said. “When other states will be using federal dollars to fill spending gaps and budget shortfalls, we will be making investments in the future, because in Missouri, we took a common-sense approach to the pandemic, never shut down businesses and have always had a conservative and balanced budget.”

Nevertheless, the federal pandemic aid gives Missouri an opportunity to make “historic” investments across the state and he’s proposing to pour the funds into child care, higher education and numerous capitol and infrastructure improvements.

“While I do not agree with the massive expansion of federal debt, the responsibility falls to us to invest wisely and make smart decisions,” Parson said.

Don’t look for new tax cuts.

Though the state is flush with cash, Parson emphasized he wants the spending to be one-time and to avoid creating ongoing costs.

He notably did not call for a tax cut in response to the windfall, in contrast to Kansas Gov. Laura Kelly. Instead he pointed out that Missouri’s revenue growth has triggered an already existing cut that he signed. The income tax rate will fall to 5.3% for most Missourians.

It’s an interesting position for the Republican, whose party traditionally demands extra revenue be returned to taxpayers.

He wants to save for years when the budget is tight, proposing to put $281 million (2.5% of the last year’s revenues) into a rainy day fund and make a one-time payment of $500 million into the state employees’ pension fund. He made a point of calling the idea “conservative.”

“We have real opportunity to make lasting investments in these areas and the future of our state,” he said. “But with these opportunities comes a responsibility to be mindful about the role of government.”

Never mind that COVID is surging. Parson is looking to ‘the next chapter.’

Even as COVID-19 hospitalizations break records in Missouri, driven by the Omicron variant, Parson sought to cast the pandemic as a thing of the past.

“I don’t support and have never supported mandates and Missourians can rest assured that my position will not change,” he said. “Today, our economy has nearly fully recovered, and we have the opportunity to make fundamental improvements to our state that will serve Missourians now and into the future.”

The governor refused to issue a statewide mask mandate or business restrictions in 2020 and signed legislation last year making it harder for local governments to issue their own. He signaled his effort to declare the pandemic over late in December when he allowed Missouri’s state of emergency to lapse.

On Wednesday, he told lawmakers the state will “close out these past 22 months and look to our next chapter.”

Going big on broadband.

Included in Parson’s spending proposals for the American Rescue Plan dollars is a $400 million to expand broadband across the state.

He said it would connect 75,000 households in both rural and underserved urban areas, called it the “largest single investment in state history.”

It’s among a series of spending ideas likely to attract bipartisan support. Democrats indicated they would fight to keep some of Parson’s priorities in the budget, creating the potential for an alliance with the governor on some spending items.

Other items in the federal spending plan include water system and IT upgrades, reducing the state’s sexual assault kit backlog, capital projects at state universities, grants to local economic development projects and several parks improvements, including the beginning of construction on the planned Rock Island Trail, a bike trail on a former railway that would span the state.

Public workers need to make more.

Even as Parson touted a strong economy and workforce development programs, he asked lawmakers for investments in the state’s own workforce.

He called Missouri’s high rates of teacher turnover “unacceptable.” Teacher pay is at the bottom of the nation, and half of new teachers leave the job within their first five years, he said.

The rest of the state workforce faces a similarly dire situation. Parson’s administration has been asking lawmakers for an immediate 5.5% pay raise and to raise state workers to a $15-an-hour minimum wage, and the upcoming budget proposal includes $228 million to sustain those raises.

It also includes $22 million that would be granted to school districts to help in raising teacher salaries to a $38,000 a year minimum.

This story was originally published January 20, 2022 at 5:00 AM.