Senate Appropriations Committee Chairman Dan Hegeman, right, discusses a spending item with House Budget Committee Chairman Cody Smith during Wednesday’s conference committee meeting (TIm Bommel/Missouri House of Representatives).
A record state operating budget that a top legislative Republican said “has a little bit of something for everyone” is heading for final votes in the Missouri General Assembly as tax revenue continues to pour into the treasury in historic amounts.
Final figures weren’t available Wednesday, but the spending plan that emerged from a day of negotiations between the House and Senate will likely exceed the $45.1 billion price tag of the proposals passed in the Senate last week.
The Senate plan for state operations was $1.2 billion more than the House version. Bills with about $4 billion in additional spending on construction, building maintenance and to use federal COVID-19 relief funds, have passed the House and await action on the Senate floor.
Lawmakers have until Friday to pass spending bills.
On items large and small, the members of the conference committee tended to agree to new spending on Wednesday. There’s an extra $214 million for public school transportation, enough to fully fund the state’s obligation to local districts for the first time since 1991. Gov. Mike Parson’s proposal to deposit $500 million of general revenue into the Missouri State Employees Retirement System to shore up the state’s main pension also won approval instead of a House plan to ladle out the money over a five-year period.
Lawmakers also approved increases for higher education institutions, scholarships, job development programs and medical providers. There’s money to boost starting teacher pay to $38,000 and restart the Career Ladder program to boost pay of experienced teachers.
“This budget has a little bit of something for everyone and if we can accompany that with some money that goes back to taxpayers, I think everybody should be relatively happy,” House Budget Committee Chair Cody Smith said after the conference committee adjourned.
Smith has proposed a $1 billion plan for income tax credits of up to $500 for individuals and $1,000 for married couples. It has passed the House and awaits a hearing in the Senate.
While the conference committee was meeting, the Office of Budget and Planning released the monthly revenue report showing tax receipts through the first 10 month of the fiscal year are growing at a 9.4% pace. The budget under consideration is based on a revenue estimate that receipts would decline by 0.5% and the surplus would be more than $2.9 billion on June 30.
The growth rate is overstated because part of the COVID-19 response last year was to push tax filing to May 15, said state Budget Director Dan Haug.
Until May revenues are counted, he said, the state won’t have a true picture of revenue for the year.
“We’re doing well but we have to take that with a grain of salt because of the due date change,” Haug said. “The state’s in a good financial spot but 9.5% is a little overstated.”
On dozens of small items, members of the conference committee found they were able to convince Smith and Senate Appropriations Committee Chairman Dan Hegeman to reverse preliminary decisions. Smith and Hegeman had already met to find agreement on differences but unlike past years, agreeing to one new spending item didn’t force a cut somewhere else.
“It really does create a challenge on how we prioritize spending when we can afford to spend on things we have not in the past,” Smith said after the seven-hour meeting.
The biggest question for each new item, he said, is to make sure it does not duplicate spending in another budget line.
Sen. Karla May, D-St. Louis, aggressively protected the dozen items she had added during Senate budget work. She was able to retain full or partial funding for job training, economic support projects and anti-crime efforts in St. Louis.
As she spoke up for two $1 million appropriations she secured, to fund development of a Black Wall Street business incubator and the Young Voices in Action leadership program, Hegeman reminded her that he had already reversed other decisions on her spending items.
“We are trying to work with you Sen. May,” Hegeman said. “We have been extremely generous already.”
May, however, responded that she had given up some of her other positions and wanted to fund the two projects.
“I am getting to the point where I have had to compromise a lot,” May said. “I am not understanding that.”
After first saying the items wouldn’t be funded, each ended up with $500,000.
One of the smaller items that didn’t win funding was Attorney General Eric Schmitt’s request for $500,000 to hire more appellate attorneys. It was approved in the House but removed by the Senate at the request of Appropriations Committee Vice Chairman Lincoln Hough, R-Springfield, who objected to Schmitt’s aggressive campaign of lawsuits against school districts and local governments over COVID-19 restrictions.
No one spoke up on Schmitt’s behalf despite behind-the-scenes efforts to restore the funds.
With the looming Friday deadline, any interruption in the orderly consideration of the budget bills could force lawmakers to return for a special session. There is a potential for issues in both chambers.
House Budget Committee Vice Chairman Dirk Deaton, R-Noel, reminded Smith and Hegeman that the spending plan has to pass in the House, which is dominated by conservative Republicans who prefer not to increase the budget.
“I know a balance has been struck and there is a point where we could have a problem,” Deaton said.
And in the Senate, where the seven-member conservative caucus has tied up debate on congressional redistricting and other issues, spending bills “are in the crosshairs,” Hough said.
The bill spending COVID-19 relief money from the American Rescue Plan Act, or ARPA, is a potential target, Hough said.
“Have you seen how the Missouri Senate functions? That is the crosshairs,” Hough said. “We have a $3 billion-plus federal ARPA bill that we are not constitutionally obligated to spend.”
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