State legislature faces tough budget choices amid COVID-19 complications

Posted on 26 March 2020 at 12:24pm
Story image: State legislature faces tough budget choices amid COVID-19 complications

JEFFERSON CITY - The Missouri General Assembly still needs to pass a budget for next fiscal year and allocate supplemental funds for the current year.

But the novel coronavirus is complicating matters as it makes revenue less certain and meeting in large groups risky. Legislators are attempting to plan for reduced funds and have asked MU Health Care for advice on how to gather without spreading the virus.

Rep. Kip Kendrick, D-Columbia, said the state is facing two revenue issues: “The economy has hit a brick wall” due to COVID-19, and the state has followed federal government direction to push the income tax deadline back to July.

Kendrick, the ranking minority member on the House Budget Committee, said the tax deadline change has the biggest impact in the short term. Though he thinks it was the right decision, it could push hundreds of millions of dollars of revenue into the next fiscal year.

Asked if he worried about COVID-19 reducing revenue, Senate Majority Leader Caleb Rowden, R-Columbia, said it is “certainly going to make things tougher.”

Funding shortfalls

Rowden said it’s possible Gov. Mike Parson will have to withhold money that has been budgeted for this year, and that Parson would be justified in doing so. He wasn’t sure where the governor would make cuts but said they could “come from everywhere” if the situation is serious enough.

Kendrick agreed: “I can’t imagine a scenario where there aren’t going to be withholds.” Programs that have needed to spend less than expected could be “low-hanging fruit” that could handle cuts more easily, but might not be enough.

‘Withholds are painful” under any circumstances, Kendrick said. “Withholds this late in the fiscal year are that much more painful.”

He said governors and budget committees around the country often make cuts to higher education when money is tight.

“I don’t endorse that,” Kendrick said. However, he said that the difficulty facing lawmakers is that “there’s just not a whole lot of fat left in Missouri’s budget. I could make strong arguments that higher ed funding is not discretionary,” but there is also a lot of mandated spending in the budget that is even more difficult to cut.

Kendrick said he has also warned Columbia Public Schools that withholds to the Department of Elementary and Secondary Education are possible as well.

Rowden is concerned about the pandemic’s effects on higher education, even beyond cuts to state funding.

He thinks it’s “going to take us a couple years at the state level to really understand what all the layers of impact were” and to find opportunities to provide resources and other support to the state’s universities.

On the positive side, Rowden said Missouri is “in a good financial position, even as of yesterday,” so the state is “starting from a position of strength.”

Kendrick said federal government action, including an increase in Medicaid reimbursement, will free up significant amounts of state general revenue for other purposes.

It’s also possible that extra funding from the federal government, as much as $1-2 billion in the next 12-18 months, could help, Rowden said. If measures Missouri is taking to stop the spread of the virus work, businesses might be able to open back up relatively soon, he added.

But if those measures don’t work, much of the state might have to remain shut down, increasing the impact on the economy, Rowden said.

He also thinks it likely that not much legislation will be passed this session. But legislators do need to pass a supplemental budget to cover the rest of this fiscal year, which lasts until the end of June, and a budget for the coming fiscal year.

The House passed a supplemental budget last week, but Kendrick said he expects that the Senate will make changes before sending it back to the House, because the Senate will have more updated information on the federal government response.

For next fiscal year’s budget, Kendrick said he can imagine several possible scenarios. The House budget committee could propose changes to the budget it passed recently, which already reduced the governor’s revenue estimate to 1.6% from 1.9%.

But the House could also approve the committee’s existing version of the budget as-is and allow the Senate to make changes that reflect the most updated information, Kendrick said, or the Senate could pass an unchanged budget to the governor and allow him to withhold funds later, if needed.

Safe return

MU Health is working to develop a COVID-19 safety plan for the Missouri legislature when it reassembles to work on both budgets.

On Saturday, Gov. Parson directed the Department of Health and Senior Services to restrict social gatherings of more than 10 people. When all seats are filled, there are 163 people in the Missouri House and 34 in the Senate.

While the legislature will have to creatively address safety concerns, “those concerns should not prevent us from doing our work,” Kendrick said, just as other essential workers including grocery clerks and medical professionals have stayed on the job.

Rowden said he reached out to MU Health to ask how to mitigate risks when legislators return from home districts throughout the state, where it is possible some might be exposed to the novel coronavirus. County health officials and Capitol police have also been involved in conversations, Rowden said.

“I appreciate the efforts of these individuals and am hopeful they will provide the roadmap to bring us back to (Jefferson City) as soon as possible,” Rowden wrote in a Tweet on Monday.

The Senate was not in session last week due to COVID-19 concerns, and the entire legislature is on spring break this week.

Rowden told the Missourian that he expects a draft of a COVID-19 safety plan by the end of the week and that it might include risk assessments similar to ones many hospitals have put in place, such as taking people’s temperatures before they enter.

More extreme steps such as testing all legislators for COVID-19 might be “far fetched,” Rowden said, especially before the tests are widely available to all Missourians.

Even with safety measures, Rowden says we’re “looking at a pretty abbreviated session.” If conditions improve, Rowden said the legislature might be able to return for a special session in the summer.