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Nixon announced $400 million in budget restrictions, cites HB 253 as catalyst

JEFFERSON CITY, Mo. — Gov. Jay Nixon told a gaggle of reporters today that he was exercising his constitutional authority over the budget to restrict more than $400 million dollars in state spending for the 2014 Fiscal Year.

Nixon said the cuts came in large part as a result about the uncertainty around House Bill 253, which he vetoed earlier this month despite Republican lawmakers hinting that they will attempt to override.

“There’s no joy in making these cuts today,” Nixon said. “But Missouri has maintained fiscal discipline and it’s Triple A credit rating in large part because we make plans, we prepare for everything and we balance our budget.”

Linda Luebbering, Nixon's Budget Director, spoke to reporters Friday after Nixon to further emphasis the impacts of the cuts and what the administration will do if the HB 253 veto is overridden. (photo by Collin Reischman)
Linda Luebbering, Nixon’s Budget Director, spoke to reporters Friday after Nixon to further emphasize the impacts of the cuts and what the administration will do if the HB 253 veto is overridden. (photo by Collin Reischman)

Nixon said the cuts were a “down payment” on HB 253, which he says could end up costing the state $1.2 billion in annual revenue when fully implemented. He added that because the budget would need to be finalized before a possible veto override, he had to “prepare for the worst,” and begin planning for large cuts to the state’s revenue.

Linda Luebbering, Nixon’s Budget Director, also told reporters that the majority of cuts were made to new programs the legislature created this year, and that core funding and older programs would be impacted less.

The cuts include more than $15 million in state payroll, as Nixon has instructed his staff to prepare a plan terminating 1,000 full time state employees, should HB 253 become law. Nixon also halted a scheduled $66 million increase in foundation formula and transportation funds for the Department of Elementary and Secondary Education (DESE).

The restrictions also include a large portion of funds appropriated for Capital improvements. Some of the projects that will be halted include the Fulton State Hospital Redesign, State Park improvement projects, a proposed new state office building and facilities and maintenance repair for state buildings. The cuts to capital improvements total more than $180 million.

It was unclear how much of the $400 million would remain restricted if the legislature sustains Nixon’s veto.

Luebbering said Nixon would look to restoring education funds as his top priority, should HB 253 be defeated. Some of the cuts, however, will remain in place until they can be re-examined during the budget negotiations next year.

The Missouri Association of School Administrators already has released a statement on the issue, calling the Governor’s move “fiscally responsible” in response to the possible “fiscal cliff” that would result in the passage of HB 253.

“You can either be for Missouri public education, or you can be for House Bill 253,” Nixon said. “But you can’t be for both.”

Neither chamber of the legislature has issued a statement about Nixon’s announcement, though several legislators have tweeted their thoughts about the cuts:

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Update: Senate President Pro Tem Tom Dempsey, R-St. Charles, released a statement about the governor’s announcement, saying he is disappointed that Nixon is “playing politics” by withholding the money.

“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,” Dempsey said. “While I’m extremely disappointed in the governor’s actions today, my intention in the Senate is to continue to work for what is best for Missourians regardless of politics.”

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Update: House Speaker Tim Jones, R-Eureka, issued a statement shortly after Dempsey’s, though much more abrasive.

“The governor has clearly violated his constitutional authority by withholding funding in a year where we have a significant budget surplus,” Jones said. “This is nothing more than a politically-motivated stunt that places Missouri families and children at risk by needlessly cutting critical education funding in an attempt to generate controversy over a common sense tax reduction bill for all Missourians.”

Jones said the budget the legislature sent was balanced and had “record-high funding for education,” but if Nixon “takes the Missouri constitution seriously, he should respect the budget-making authority of the legislature, put an end to this farce, and follow the fiscally-responsible spending plan [the legislature] sent him.”

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Update: House Budget Chairman Rick Stream issued a statement addressing Nixon’s restrictions.

“In the past six months, Governor Nixon has purchased a brand new plane, vetoed a tax cut for Missouri taxpayers and businesses, and is now going to cut funding to schools, farmer and state employees and healthcare for Missourians,” Stream, R-Kirkwood, said in a statement. “While the Governor is flying around on his new plane, Missourians are going to suffer. These withholds cannot even be taken seriously with the revenue growth we are experiencing.”

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Update: Senate Appropriations Chairman Kurt Schaefer, R-Columbia, also issued a written statement on Nixon’s announcement.

“At a time when our state is just beginning to show signs of economic recovery, the Governor is going to make a series of devastating withholds to education while denying Missouri citizens the same tax breaks he has supported for our state’s largest corporations,” Schaefer said.