State budget director predicts fallout will be a ‘multi-year issue’ 

JEFFERSON CITY, Mo. — Missouri will experience a more than $500 million economic shortfall through the end of the fiscal year due to the coronavirus pandemic, Gov. Mike Parson predicted Wednesday. 

To offset the estimated shortfall, Parson announced a freeze of about $180 million in the state budget, impacting the Economic Development, Higher Education and Workforce Development, Natural Resources, and Transportation departments as well as the Office of Administration. 

More budget restrictions could come as the impact COVID-19 has on Missouri’s economy becomes clearer, Parson said during his daily press conference, predicting the revenue declines that could be larger than seen during the Great Recession. 

“COVID-19 is having a serious impact, not only on public health but also on our economy,” Parson said. “We have had to take hard looks at our budget and make some very difficult decisions to make sure our budget is balanced and to have funds to combat COVID-19 going forward.”

Impact on state economy 

While the state is not under a statewide stay at home order — a decision decried by many Democrats — Parson has instructed Missourians not to congregate in large groups. And many local municipalities have enacted such mandates. 

With businesses shuttering completely or scaling back on operations, countless Missourians have lost jobs during the global pandemic. Nearly 4,000 Missourians filed initial unemployment claims for the week ending March 14. In comparison, more than 42,200 people filed initial unemployment claims for the week ending March 21, according to data from the Missouri Department of Labor. 

The unemployment rate was 3.5 percent in February 2020 in Missouri. 

More than 1,500 Missourians have tested positive for coronavirus since early March, and 18 people have died as of Wednesday afternoon. About 17,427 people have been tested so far, according to Missouri’s health department. 

State Budget Director Dan Haug said Missouri is seeing “unprecedented drops in revenue” as more people remain at home and predicted a “multi-year issue” with the impact on the budget. 

He also praised the immediate restriction of funds so Missouri can have the cash upfront to purchase personal protective equipment (PPE), ventilators, and other supplies to combat COVID-19 — even if the federal government will provide reimbursements down the road. 

Impact on supplemental budget

The governor’s decision to restrict the $180 million will allow some changes and movement within the supplemental budget lawmakers are still working on, House Budget Chair Cody Smith told The Missouri Times. 

“What the governor did today was certainly appropriate at this time. The disruption of the economy that we’ve seen across the state due to the pandemic has been unprecedented and tremendously impactful to state revenues,” Smith said. “What he’s done is reshaped the budgetary priorities throughout the rest of the fiscal year and done so in such a way that not only tried to cause the least impact for vital state services but also prepared us to be reactive to greater needs because of the pandemic in places like emergency services.” 

“I’m supportive of what he’s doing now and think it’s the right thing to do,” he added. 

As lawmakers are expected to be back in Jefferson City next week to tackle the supplemental budget, Smith said the withholding could free up some money to be repurposed. However, the main impact will come from federal funding sent to Missouri. 

In addition to the $180 million in budget restrictions, the Governor’s Office said it is hopeful for an additional $315 million in federal funding this year to offset the shortfall caused by coronavirus.

The nonprofit Missouri Budget Project has estimated Missouri could see nearly $3 billion from the federal CARES Act, with higher education being a particular recipient. 

“Funding and programs included in federal legislation will provide state policymakers tools to address Missouri’s state budget during this time of uncertainty,” Amy Blouin, president and CEO of the Missouri Budget Project, said in a statement. “Missourians who have lost their jobs are struggling to pay bills now. Stimulus money can help our state maintain the health, child care, and economic assistance that families need to stay afloat.” 

The General Assembly has not been in full session since mid-March due to the coronavirus outbreak. The Capitol closed on March 24. 

Details on how exactly the public can view the goings-on next week have not been made available, but Majority Floor Leader Caleb Rowden has said adjustments and precautions will be put in place. 

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EDITOR’S NOTE: For up-to-date information on coronavirus, check with the CDC and DHSS.