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As compared to the FY 2016 budget or House budget, some notable FY 17 budget changes recommended by the Senate include:

HB2002

• $70,368,735 increase to the funding formula
• $21, 180,466 increase for Early Childhood Special Education
• $1 million increase of Missouri Preschool Program
• $100,000 for Dyslexia Training Program

HB 2003

• $55,789,147 for Performance and Equity Funding for Higher Education Institutions
• $4,504,016 Equity funding for Community Colleges
• $373,979 Equity funding for State Community College
• $1.5 million increase for Lincoln University Land Grant Match
• $3.5 million for MSSU/UMKC Cooperative Dental Program
• $2.5 million increase for A+ scholarships
• $2 million increase for Bright Flight Scholarships
• $1 million reduction to the University of Missouri Administration

HB 2010

• $26, 587, 687 was added for Medicaid Home Based and Community Services cost to continue
• $29, 587, 687 increase to replace Tax amnesty funding for 3% increase to Home and Community Based Service (HCBS) providers and private duty nurses
• $31, 150, 436 for anticipated caseload growth

The Senate SCS recommends that funding for HB2010 increased by 6.9% to $1339,237,311

Notable changes from the House recommendation include:

• $375,000 addition for Community Public Health
• $500,000 addition got HIV Pilot Program
• $375,000 reduction for Diaper Banks
• $75,000 reduction for expansion of Cord Blood Services Delivery
• $499,999 addition for Missouri Area Health Eduction Centers
• $750,000 added for Treatment services for offenders
• $600,000 added for Emergency room enhancements
• $1 million added for Tuberous Sclerosis Complex Research

HB 2011

Funding for the Department of Social Services would increase by 7% over FY16 levels according to the spending plan approved by the Senate.

That includes a 16.5% increase in General Revenue funding. Significant contributors to the increased spending include $262,369,583 additional funding for the cost-to-continue for the current program; $170,837,494 additional Pharmacy costs because of inflation and increased utilization; $17,831,371 increased general revenue funding needed because of a change to the Federal Medical Assistance Percentage which lowered from 63.323% to 63.228%.  The Senate also added an additional $18, 886,473 for a 1.5% provider rate increase for Long Term care providers.

Notable changes from the House recommendation include:

•  $600,000 added for the Youth Connection program in Kansas City and Springfield
• The 10% House recommended increase in the purchase of child care was cut back to 5%.
• MoHealthNet was reduced by about $56 million.
• The Senate budget recommendation switches $55 million of General Revenue funding to federal funding. The fund switch was possible was because of a settlement with the federal government over reimbursements for youth services. The settlement resulted in a refund of $55 million from the federal government, which was used to offset $55 million of GR spending with federal funds. It is a little unclear where the money was used in the budget.

While the Senate Appropriations Committee has not yet passed the bill, it has so far made the following changes to HB 2002:

Foundation Formula

The Senate agreed with the $71,055,569 increase to the formula recommended by the House however, the Senate did call for a fund switch that calls for using an additional $5 million of lottery funds and $5 million less in GR.

Parents as Teachers

The Senate agreed with House recommended core funding of $17, 462,250, but did not agree with House additions for PAT in the amounts of $537,750 and $214, 076

The Senate cut funding for intra-district transportation in St. Louis and Kansas City that had been added by the House.

Funding was also cut in the amount of $150,000 for a community partnership for a cooperative dropout prevention program. This line had been added by House.

The Senate added $150,000 for Math and Science Tutoring. The Department had asked for $300,000 and the House had cut the amount to $0.

The Senate accepted the Department Recommendation of $100,000 for  Kansas City Public Schools  Tutoring Program. Both the Governor and House had recommended $0.

The Senate added $200,000 for active shooter training and $136,000 for school board training.

$50,000 recommended by the House for a  STEM web-based pilot program was cut by the Senate.

Funding in the amount of $100,000 was added by the Senate for Dyslexia training.

$100,000 of federal funding authority was added to raise the level of funding back to the Department recommended level of $415,875 to provide incentives for low income high school students to pay for exam fees for Advanced Placement courses through a federal grant. The house and Governor had recommended $100,000 less.

The Senate added back $3.1 million that the Governor had recommended for the Missouri School Improvement Program. The plan is designed to provide early intervention support for struggling school districts.

$200,000 added by the House for a Trauma Informed Development Program was eliminated by the Senate.

$10,000 for the  Characterplus program was added by the Senate. The House and Governor did not recommend the Department request. However, the Senate cut $25,000 that the House had added for a Trauma Approach to Character Education Initiatives.

The Senate added $2 million to the Missouri Charter School Commission core funding, bringing the total to $5,450,000 for charter schools.

The Senate added $20,000 to fund additional communication equipment for the Deaf Commission.

While the Senate Appropriations Committee has not yet passed the bill, it has so far made the following changes to HB 2003:

The Senate cut $500,000 added by the House to fund the establishment of a state-wide student web portal.

The House had added $450,000 for the College Bound program. The Senate cut that funding to $0.

The Senate Committee added:

• $1 million for Missouri S & T
• $400,000 for Missouri S & T
• $1 million for SEMO cyber security
• $5 million for cooperative medical training

The Senate added $500,000 to the $3 million of funding for a cooperative dental program between UMKC and Missouri Southern. Students will be located at Missouri Southern but be registered with and receive a degree from UMKC.

The Senate increased funding for Autism Services training at Truman University to $1 million, up from the House position of $915,000.

$500,000 recommended by the House for the Harris-Stowe Urban Education institute was cut by the Senate. However, Sen. Nasheed will likely work to get the funding added back at conference.

Performance and Outcome funding for the Four Year Universities was left OPEN at this time.

Equity funding for Community Colleges and for Missouri Technical College was also left OPEN.

The Senate agreed with the House to add $500,000 to the core for Lincoln University for land grant matching funds. However, the line added by the House to increase the funding an additional $1.5 million was left open, and the Senate may try to add more.

The core funding for the University of Missouri was left OPEN. The House had cut the line by $8,674,137.

The Senate did add $500,000 for MU for the Veterinary School.

$1 million was added for graduate programs at Harris-Stowe University

The House had cut $500,000 for the UMKC neighborhood initiative program. The Senate added $1.5 million for the program.

$1.5 million was added for additional ECHO projects

$750,000 was added to bring the total to $1 million for a new decision item to fund operations of the Missouri Historical Society.

While the Senate Appropriations Committee has not yet passed the bill, it has so far made the following changes to HB 2010:

Division of Community and Public Health HB10.700

The Senate removed $474,434 from this fund to be reallocated to the Div. of Community and Public Health (HB7.010) for “Show Me Healthy Women,” a program which offers free breast and cervical cancer screenings for Missouri women who meet age, income and insurance guidelines.

Core Public Health Functions

While the House recommended $10,147,692 for these functions, the Senate agreed with the Governor’s recommendation of $10,522,692.  The Senate also left Aid to Local Public Health Agencies open for future review.

ADAP-Aids Drug Assistance Program

The Senate added $500,000 in the form of an NDI to the Federal monies of $6,000,000, this  NDI is to fund an AIDS drug assistance pilot project to investigate HIV/AIDS effect on Veteran populations.

Brain Injury Services

While the House recommended $2,983,106 for these services, the Senate agreed with the Governor’s recommendation to cut this item to $2,034,725. While the House recommended $1,091,214 to these services in the form of an NDI, the Senate agreed with the Governor’s recommendation of $0.

Genetics Program

While the House recommended $1,766,132 for these services, the Senate agreed with the Governor’s recommendation of $1,786,132. This program provides screening, diagnostic evaluations and counseling for individuals with genetic diseases.

Show-Me Healthy Women

The Senate recommended an additional $450,556 of Federal funding and an additional 8 full time equivalent employees for this item.

Diaper Bank Grants

While the House recommended $375,000 for these grants, the Senate agreed with the Governor’s recommendation to cut this item to $0.

Primo and Loans Program

While the House recommended $1,756,237 and the Governor recommended $1,756,236 for these grants, the Senate recommended to restore $250,000 of funding and to add an additional $250,000 for area intervention centers.

Cord Blood Delivery Service

While the House recommended $11,418,373 for this service, the Senate agreed with the Governor’s recommendation of $11,343,373. This funding provides for the expansion of courier services for delivery of cord blood to the St. Louis Cord Blook Bank at SSM Cardinal Glennon Hospital.

Medicaid Home & Community Based Services: Cost-to-Continue

The Senate left this decision open for future review.

Medicaid Home & Community Based Services: Utilization

The Senate left this decision open for future review.

County Senior Centers

While the House recommended $100,000 for these centers, the Senate agreed with the Governor’s recommendation of $0. This item provides funding for the operational costs of senior nutrition centers.

Despite a sluggish February, general revenue (GR) collections remain on track to meet the fiscal year (FY) 2016 revenue estimate. Net of refunds, February GR collections declined 0.5 percent, leaving the FY 2016 overall growth rate at 3.0 percent. Should overall growth continue at this level, the state will attain the 2.8 percent growth rate that is called for the new Executive Budget that was presented by Governor Nixon to the General Assembly in mid-January.

Individual Income Tax gross collections rose only 0.8 percent in February relative to February of 2015. Even with this relatively weak performance for the month, the FY 2016 overall growth rate remains at a very respectable 5.7 percent.

Sales and Use Tax gross collections posted a strong February with collections increasing 6.6 percent. The February results brought the FY 2016 overall growth rate to 3.2 percent. This growth rate is consistent with the FY 2016 forecast growth rate of 3.0 percent…

Corporate Income/Franchise Tax gross collections totaled only $2.2 million in February which was a decline of about 81 percent for the month. For the eight month period ending February 29^th, gross Corporate collections have fallen 8.1 percent. Some improvement in this area will be needed over the final four months f or the state to meet the FY 2016 forecast for this tax.

GR Refunds have increased 15.6 percent over the first eight months of FY 2016. This is a major negative result from the first eight months of FY 2016. The Governor’s revenue forecast is for GR Refunds to increase 9.5 percent for the year. March and April are both major refund months. Growth in refunds or lack thereof during the next two months will play a key role in determining the state’s fiscal health as FY 2016 concludes on June 30^th.

HB 2600, sponsored by Representative Flanigan was heard in the Budget committee this week. The bill would authorize a Surplus Revenue Fund if revenues exceed House budget revenue estimates. Currently the House version of the budget uses over $120 million from the yet to be created fund. The Senate’s position concerning the fund is still unclear.

The proposal came as a result of a lack of agreement on potential state revenues for fiscal year 2017. The House is not in agreement with the 4.1% increased revenue estimate offered by the Governor. Instead Chairman Flanigan proposed a revenue increase estimate of 3.1%, or about $91 million less.

The funding will work like two buckets. The General revenue “bucket” would have to fill before money would flow into the Surplus revenue “bucket.” Only then could funds from the surplus revenue fund be used. Flanigan said that if the Governor is correct in his estimate, then all areas will be funded. However, it was pointed out that even if the Governor’s estimate is correct, funding might not be available until very late in the fiscal year. This could create a situation in which lower priority items could be funded before items such as education and health care.

This is similar to an approach used two years ago when a consensus was not reached for the revenue estimate. The revenue estimate process does not appear in statute, so there are no guidelines governing its use in the budgeting process.

The committee will likely vote the bill on next Wednesday.

Tomorrow a Senate Committee will hear a proposal to further cut Missouri income taxes, but cuts won’t create the good jobs Missouri needs. And they will undermine our future by making it harder for the state to invest in what really does build a stronger economy.

SB 574, to be heard by the Senate Ways & Means Committee tomorrow morning, would increase and accelerate the tax cuts passed in 2014. The 2014 cuts are expected to cost $620 million each year, and according to the fiscal note, SB 574 will cost an additional $528 million more each year when fully implemented.

That means the state would have $1 billion less to invest in the education and infrastructure vital to creating real, sustainable economic growth. This $1 billion blow would come as the state is already underfunding the K-12 education formula by $500 million a year, and our state is still struggling to recover from both the effects of the Great Recession and previous tax cuts.

There are two main things to consider about additional tax cuts:

Tax Cuts Don’t Work

Oklahoma and Kansas have led the way on tax cuts. And they show us Missouri should head in a different direction.

• Oklahoma is battling a budget deficit of more than $1 billion in next year’s budget. Similarly, Kansas’ tax cuts have left the state struggling to pay for schools, colleges, and universities, threatening the state’s long-term economic vitality. And in the short-term, the state’s job and income growth lags behind the rest of the nation and business growth has been unimpressive.

• Claims that Kansas’ “pass-through” tax cuts have created small businesses are misleading at best. This type of tax cut just isn’t effective at job creation; rather it just creates skewed incentives for business. Net growth in registered businesses in Kansas was low. The so-called increase was the result of many businesses just dissolving and recreating themselves to take advantage of a new tax status.

To Really Create Jobs and Economic Growth, Invest in the Future

Missouri can promote real, long-term economic growth by investing in quality schools to educate a skilled workforce; access to affordable health care to ensure Missourians are healthy for work and school; efficient transportation that enables companies to bring their products to market and people to commute to work; and safe, stable communities.

Deep income tax cuts mean the state will have to raise other taxes or cut these important things, because there simply won’t be enough revenue to make the investments we need. As a result, cuts in income taxes often result in increases to sales and property taxes, which hit middle- and low-income Missourians the hardest.

This afternoon, the House Ways & Means Committee may hold an executive session on HJR 56, a proposal to amend the state constitution to limit the growth of state revenue. A similar amendment in Colorado has been a failure, and business and civic leaders there have long been trying to overcome its disastrous impacts.If HJR 56 had been in effect for this fiscal year, Missouri would have been $319 million over the mandated spending limit. And the Governor’s budget proposal for FY 2017 would be $713 million over the limit Missouri is currently underfunding education by approximately $500 million a year, and is digging its way out of cuts to many other critical health and education services. Our state cannot afford arbitrary spending limits that wouldn’t allow Missouri to fund education and invest in future generations.

HJR 56 would limit the annual  growth in General Revenue Appropriations to the percentage growth in Missouri population plus the percentage increase in the national inflation rate as measured by the Consumer Price Index.

Had this limit been in effect for FY 2016 and for FY 2017, the allowable growth in general revenue appropriations would have only been 0.3% and an estimated 1.0% for these years, respectively.

State Still Behind FY08, Adjusted

January’s general revenue collections indicate that Missouri is likely to meet the current fiscal year’s budget. However, the state is still struggling to catch up in funding for critical public services including education and health care after years of budget reductions. As policymakers continue their preparations for next year’s budget, they should explore policies like the Streamlined Sales Tax Collections Mechanism to better meet the needs of Missourians.

A brief summary of January collections:

General revenue, net of refunds, grew by 7.7 percent in January compared to the last year, leaving the Fiscal Year 2016 (FY 2016) overall growth rate at 3.4 percent. Continued growth at about this level will allow the state to attain the 2.8 percent growth rate that is called for the new Executive Budget that was presented by Governor Nixon about two weeks ago.

Growth in the main revenue sources include:

• Individual Income Tax gross collections rose 9.8 percent in January relative to January of 2015. This puts the FY 2016 overall growth rate at a very respectable 6.5 percent.
• Sales and Use Tax gross collections managed to register a positive performance in January, increasing 0.4 percent in January compared to January of 2015. This results in a FY 2016 seven month growth rate of 2.7 percent.
• Corporate Income/Franchise Tax gross increased 56 percent in January, but remain 5.2 percent below the total reached after seven months of FY 2015. The decline in this tax is largely attributable to the phase-out of Missouri’s corporate franchise tax.
• GR Refunds have increased 25.3 over the first seven months of FY 2016. This is the major negative result from the January collection period. February and March are the peak of the GR Refund season. Growth in refunds or lack thereof during these months will play a key role in determining the state’s fiscal health as FY 2016 comes to an end.