Capitol Report is produced by the State Government Reporting Program of the Missouri School of Journalism.
Use of federal stimulus funds for state projects, income-tax reduction still undecide
Special to The Northeast News
It has often been said that government is about setting priorities.
And with $4.4 billion in federal stimulus funding expected to be available in Missouri over the next two fiscal years, the question of how best to prioritize stimulus-funded items in the state's budget was reinforced throughout the week of April 20.
On Monday, members of the House Budget Committee approved a package of four bills that contained more than $3 billion in federal funding for a variety of projects — ranging from public-transit improvements in St. Louis and Kansas City to maintenance and repairs affecting Missouri colleges and universities.
The bills would use budget stabilization funds, a portion of what is being appropriated through the overall American Recovery and Reinvestment Act (or stimulus package), to pay for more than 100 projects across the state. Those projects are as small as $300,000 for the construction of a parking lot at a commercial driver’s license facility in Pettis County and as large as $111.7 million for a statewide communications upgrade. They also include $20 million for a new or renovated building for the State Historical Society of Missouri, $7.45 million for a 28-bed ward at the Northwest Missouri Psychiatric Rehabilitation Center and $490,000 for publication of the state's official manual, among many other expenditures. (A full list of what committee members approvedMonday can be found at http://www.house.mo.gov/billtracking/bills091/biltxt/commit/HB0018C.HTM, http://www.house.mo.gov/billtracking/bills091/biltxt/commit/HB0019C.HTM, http://www.house.mo.gov/billtracking/bills091/biltxt/commit/HB0020C.HTM and http://www.mdn.org/cgi-bin/billhttp.exe?FORM=HB&MYNUM=21&LIMIT=1&YEAR=2009.)
House and Senate recommendations for an overall operating budget in fiscal year 2010, which begins July 1, are between $23 billion and $24 billion.
Monday's action essentially negated an earlier plan by Democratic Gov. Jay Nixon to use $100 million in budget stabilization funds for a program that would have provided loans to businesses that pledged to create 100 new jobs in Missouri within the next five years.
Officials in the governor's office argued Monday that budget stabilization money was intended for job creation, not legislators' "pet projects."
"In a time when we have a 25-year high in unemployment, the governor believes investing in job creation should take precedent over pet projects," Nixon spokesman Scott Holste said.
House Budget Committee Chairman Allen Icet, R-Wildwood, argued, in turn, that Nixon's job-creation program could also be considered a pet project. He said his committee had dedicated funds to good projects and simply had different priorities than the governor.
Budget Committee member and Columbia Democrat Chris Kelly commented that Nixon's plan was vague.
"At least these (projects) have some definition to them," he said of the House Budget Committee's proposed solution.
Kelly had earlier voiced support for appropriations that would give the four-campus University of Missouri System a 10 percent increase in repair and maintenance funding instead of the 30 percent decrease that had been expected.
Despite Monday's approval from members of the House Budget Committee, the plan that was set forward then stalled Tuesday (April 21) in the House Rules Committee, which must approve the budget bills before an overall House vote is taken.
After a Wednesday caucus among Republican representatives regarding budget issues, a completely new plan was announced Thursday.
That plan, which could replace many of the appropriations made in the budget bills considered just days before, calls for a reduction of the state income tax rate from 6 percent to 5.5 percent. It is estimated to put $1 billion back into the pockets of Missouri taxpayers over two years, a savings that would average out to around $500 per taxpayer.
According to the Associated Press, it would also equate to $360 million in unrealized revenue for the state each year.
In defense of changing gears from a list of targeted projects to Thursday's tax-cut proposal, Rep. Steven Tilley, R-Perryville, said, "Spending expanded to the point that we were uncomfortable with it. We didn't feel like we had the votes to pass (the budget bills approved earlier in the week), so we decided to go a different route."
At least one Republican state senator, John Griesheimer, of Washington, was reluctant to embrace the idea Thursday. He said any such measure would face an uphill battle.
Sen. Joan Bray, D-St. Louis, questioned the legality of using stimulus dollars for a tax reduction.
"Stimulus money is coming to the state with lots of strings attached," she said, adding, "I don't see how they can do what they're proposing to do here."
Icet, the House Budget Committee chairman, disagreed. He said a tax cut could indeed be treated as general revenue funds.
For the tax cut to utimately take effect, it would have to pass the state Senate and win approval from a conference committee comprised of five members of both legislative bodies — all while still meeting a May 8 deadline for Democratic Gov. Jay Nixon's signature.
House speaker Ron Richard, R-Joplin, stressed Thursday that details are still being ironed out and added that he hopes a bill will be ready for debate by early next week.
Holste, the spokesman in Nixon's office dismissed the effort, however.
"The House Republicans' budget plans are kind of like Missouri weather," he said. "There's no use getting too worried about it, because it's likely to change within an hour or two."
* For more on Monday's decision by the House Budget Committee, see http://mdn.org/2009/STORIES/JOBBUD.HTM.
* For more on Thursday's income-tax-reduction plan, visit http://mdn.org/2009/STORIES/REBATE.HTM.
