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Republicans decry Nixon’s $50 million budget withholdings

JEFFERSON CITY, Mo. – After Gov. Jay Nixon took unilateral action Monday to cut nearly $50 million from the state budget, some lawmakers have decried the spending cuts as unnecessary and even harmful to the state.

“I’m questioning why the withholdings are necessary when the governor is holding onto $325 million surplus that wasn’t spent,” Senate Budget Chair Kurt Schaefer, R-Columbia, said.

Nixon cut just over $46.1 million in state programs, eliminating funding for some of those programs entirely, because of a ruling by the court of appeals. The Tobacco Master Settlement Agreement of 1998 forces tobacco companies to pay states a certain amount of money annually to help pay for the costs of medical care for smokers and those who suffer from other tobacco-related illnesses.

The ruling made by the St. Louis Circuit Court Sept. 22 held that tobacco companies did not need to pay the state of Missouri $50 million this year.

Missouri Attorney General Chris Koster said he would appeal the ruling to the state Supreme Court, but it is unlikely that will occur before the budget for the this fiscal year goes into effect.

The governor released an itemized list of the withholdings, which is available here.

In a statement Monday, Nixon called the spending cuts necessary “to keep the budget in balance and our AAA credit rating intact.”

“Based on the St. Louis Circuit Court’s decision, both my administration and members of the General Assembly counted on these funds being available when the Fiscal Year 2016 budget was passed,” Nixon said in a statement “Now that this ruling has been overturned, this unexpected loss of funds must be accounted for through spending restrictions… In taking these necessary actions, we have made every effort to minimize the impact on vital services by reducing spending from new programs yet to get underway and funding increases that would grow the size of government.”

On the other hand, Lt. Gov. Peter Kinder said the withholdings would take away money from the state’s “most vulnerable residents.”

“It is troubling that Gov. Nixon has decided to cut funding for children, law enforcement, the mentally ill, the disabled and other needed programs,” Kinder said. “These $46 million in withholdings are unnecessary, given that the state has seven times that amount in a budget surplus.”

Rep. Jeremy LaFaver
Rep. Jeremy LaFaver

Some legislators agree with the governor that the withholdings as a necessary aspect to maintain the state’s fiscal responsibility.

“I think given the tobacco settlement issue, [Nixon] did what he had to do,” Rep. Jeremy LaFaver, D-Kansas City, said. LaFaver, a member of the budget committee, believes the reason these cuts are happening are because of a lack of revenues for the state.

“From my standpoint, a lot of the issues why we don’t have that money don’t happen in the budget committee, it tends to happen when we give these big $4 million tax cuts to commercial laundries,” he said, citing an example. He says those tax cuts, and many others like it, take money away from the state and cause these programs to lose their state funds.

“At some point, that has to start connecting in people’s minds.”

However, Schaefer strongly suspects the reason for the budget withholdings has to do with a planned Medicaid funding supplement that Nixon asks for every session.

“He’ll try to sneak through a massive Medicaid increase under the cover of darkness,” Schaefer said. “He never puts those in his budget, and then he asks for a supplemental. The reason he’s withholding money is to not spend money on legislative priorities but to use it along with the surplus to grow Medicaid.”

Schaefer
Rep. Kurt Schaefer

Schaefer said the routine fits a typical annual script for Nixon. He said the governor will ask for a certain amount of money from the legislature, which will oblige his requests. Then, in January, halfway through the fiscal year, Nixon will come back to the legislature, claim his initial estimate was off by a few hundred million dollars and ask for a supplement from the legislature. Without that supplement, the state cannot match the federal funds paid into Medicaid.

“The threat from Nixon and the federal government is ‘This is how much it cost, and if you don’t cough up that money we will kick you out of the Medicaid program,’’” Schaefer said. “It’s happened every year. The increases we’ve given to K-12 and higher education, that’s what he’s using to expand Medicaid.”

Schaefer sees that control over state spending, by both the federal government and the executive branch of the state, as a yoke from which a state will eventually have to liberate itself. While he mentioned other states have talked about leaving the Medicaid program, especially as spending has increased over the past decade, he hopes Missouri becomes the first to do so during the next legislative session.

“No state yet has told the federal government to pound sand and get out of the Medicaid program, and it is going to come to that point,” Schaefer said. “Whether this is the year and I hope this is the year, it’s completely fiscally unsustainable.

“At some point, we have to say this increase is not going to happen.”