Nixon Withholds $400 Million, Goes into Effect Monday

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JEFFERSON CITY - Myriad state functions from higher education to law enforcement endured marked cuts as Missouri's 2014 budget went into effect on Monday with more than $400 million missing.

On Friday, Gov. Jay Nixon announced he would restrict $400.7 million from the new budget. This means that portion of the budget cannot be spent until Nixon chooses to release it, regardless of how lawmakers previously chose to allocate the funds. The cuts include nearly $100 million to building construction and repair in the mid-Missouri area. One of the building cuts eliminates a $13 million project to reconstruct Fulton State Hospital. Additionally, the cuts include $66.4 million to transportation, $45.7 million to Medicaid provider rate increases, and the elimination of 1000 state government jobs.

Nixon also vetoed four items, worth $1.14 million total.

Nixon cited House Bill 253, which he referred to as a "fiscally irresponsible, ill-conceived" piece of legislation, as the reason he would be withholding parts of the budget. HB 253 proposed decreasing the state and individual corporate tax rates in phases throughout the next ten years. The bill would phase in a 50 percent business deduction and a 0.5 percent individual income tax cut over 10 years. Additionally, the bill would impact the transportation development tax, tax amnesty, and the streamlined sales and use tax agreement.

The bill was first introduced in the House on January 22 by Reps. T.J. Berry, R-Kearney, and Tim Jones, R-Eureka. The House passed HB 253 on May 9, with 103 votes in favor of the bill and 51 votes against it. The bill was then sent to Nixon on May 30, and he vetoed the bill a week later.

"As lawmakers begin to understand the problems with House Bill 253 and their immediate and continuing consequences, I am confident that they will agree this bill should not become law," Nixon said during his news conference on Friday. "But no governor can responsibly manage a state budget on the assumption a veto will be sustained. That is why, given the additional spending appropriated by the legislature and the uncertainty created by House Bill 253, we must take action now to keep our state's fiscal house in order."

Senate Leader Tom Dempsey, R-St. Charles, released a statement in response to Nixon's withholding of $400 million. He accused Nixon of playing politics with Missouri's education, capital improvements and state services.

"There is absolutely no reason or need to withhold revenue," Dempsey said in a news release sent out by his office. "To date net General Revenue is up 10.2 percent over last year which should net $350 to $400 million over the FY 2013 revised consensus revenue estimate for the current FY 2013 budget. These funds are rolled into FY 2014. Using the withholdings to prevent a possible veto override of House Bill 253, which would lower our tax burden, is overstepping and holds the people hostage with their own money."

Higher education systems throughout the state are slated to lose access to $33.7 million as a result of Nixon's hold on the budget. Earlier in June, the UM system's governing body said it was "not opposed" to the tax cuts Gov. Jay Nixon vetoed.

During a UM Board of Curators meeting, the UM Curators tweeted that President Tim Wolfe "is not opposed to tax cuts as long as we are completing the equation for general revenue and funding for education." The Curators' Twitter account followed that tweet by noting that "potential shortfall in state revenue could lead to 10 percent decrease in state funding. Shortfall would equate to an increase in tuition of 8-16 percent."

In an email, the UM System's Chief Communications Director, John Fougere, said the UM System would have to consider raising tuition to compensate for a loss in state funding.

"If we did not steeply raise tuition, we would have to look at possibilities such as cuts in our workforce, decreased wages or even enrollment caps," Fougere said.

If state lawmakers attempt to override Nixon in September, they would require 109 affirmative votes in the House and 23 in the Senate.

 Below is a complete list of the FY 2014 Budget Restrictions