JEFFERSON CITY, Mo. – The House Budget Committee’s work on the 2019 fiscal year’s budget is officially underway, having received the recommendations of Gov. Eric Greitens less than 48 hours earlier.
The committee met Wednesday morning to hear testimony from the Missouri Office of Administration, including its seven divisions and 14 boards and commissions.
As the Commissioner of the Office of Administration, Sarah Steelman presented the budget for OA, vowing to stay through the entire proceedings.
“You’re the unlucky one, you have to go first,” Rep. David Wood told Steelman with a laugh.
“We should be partners in trying to achieve good results,” she started, addressing the committee. She noted that thanks to the committee, they have been able to look at things differently, and have identified certain problems.
The main item she said they’d like to address is making the IT procurement process more streamlined and reducing turnaround time.
— Missouri OA (@MissouriOA) January 24, 2018
“You often hear ‘let’s run government more like a business’ and it’s almost impossible to do because the private realm is so different from the public realm,” Steelman told the committee.
While fielding questions from the legislators, it became clear where the line will be drawn on at least one issue. That is the proposal of taking out a $250 million loan to pay tax returns on time.
Upon receiving the Governor’s budget, the state legislature’s budget leaders issued the following statements:
“I have spoken with Governor Greitens about his plans for Missouri,” Sen. Dan Brown, R-Rolla said. “I appreciate him reaching out to the legislature as he presents his vision and his willingness to work with us. I look forward to working with him and his staff on it in the coming months as we work together to improve the lives of Missourians and set priorities for our state and its taxpayers.”
“Governor Greitens and I have discussed Missouri’s budget priorities and we have both committed to working together to meet the state’s fiscal challenges in a cooperative effort to produce a responsible budget for Missouri taxpayers,” Rep. Scott Fitzpatrick, R-Shell Knob, said.
However, when the issue of the “payday loan” as Rep. Kip Kendrick called it, Chairman Fitzpatrick had other thoughts.
“We’re not going to do this,” he said, halting the line of questioning. “So you guys can keep asking questions, but we’re not going to do this, I don’t think.”
Later, Fitzpatrick said the following in a tweet:
“To be fair to them, they are asking for a revolving line of credit that would fill the gap for the 45 days they can’t use the budget reserve fund for cash flow. Not intended to be long-term debt.”
To be fair to them, they are asking for a revolving line of credit that would fill the gap for the 45 days they can’t use the budget reserve fund for cash flow. Not intended to be long term debt.
— Scott Fitzpatrick (@FitzpatrickMO) January 24, 2018
Under the proposed plan, Missouri would seek approval for a $250 million short-term loan to help speed up the issuing of tax returns.
“Refunds have always been a problem, it’s always been difficult because of the cash flow of the state and the timing,” Steelman said. “Generally speaking, we’ve been trying to find ways to solve this problem knowing that we have limited resources and a time constraint.”
Budget director Dan Haug explained that the number of $250 million was there as more of a maximum amount, saying that they actually expected it to be closer to $140 or $150 million. He also explained that the concept was nothing new in the U.S., telling the committee that “tax anticipation notes”, as they are called, are used by other states, including “at least one other AAA-rated state.”
Since Monday, Haug has reiterated that the interest paid on the proposed loan would be somewhere in the realm of one percent, and would be cost neutral when compared to the interest the state would have to pay for issuing late refunds.
If enacted, it would be the first time anything like this has ever been done by the Show-Me State.
After the committee recessed for session in the House, Fitzpatrick clarified that his statement meant they would not be doing the tax anticipation measure at all, saying he made the comment because there was really no point in wasting words over the proposal.
Benjamin Peters was a reporter for The Missouri Times and Missouri Times Magazine and also produced the #MoLeg Podcast. He joined The Missouri Times in 2016 after working as a sports editor and TV news producer in mid-Missouri. Benjamin is a graduate of Missouri State University in Springfield.