The state budget made simple (maybe)

Welcome to PoliSci 101, Basic Stuff of Government.
Let’s see if we can do some plain language explanations of the Governor’s budget actions this week and take a brief look toward September. The numbers are from the state budget office.
Total amount vetoed or withheld: $1,122,094,255.
Of that total, $846,348,271 has been withheld and could be released by the Governor after the September veto session if things go his way..
Gone, for now at least: $275,745,984 that has been vetoed. However, if the vetoes of tax credit bills are upheld and tax income (general revenue funds) pick up, at least some of this money could be reinstated through an emergency appropriations bill the legislature could consider at the start of next year’s session. That bill, like this year’s appropriations bills, would have to be approved by the Governor who could still exercise the line-item veto. But mid-year “emergency” appropriations bills don’t generate the kind of heat we sometimes see in May and June after a full fiscal year budget is passed. And 2015 won’t be an election year.
In most cases, Nixon has vetoed or withheld INCREASES and has not cut existing budget levels. For example, he has withheld $100,200,000 for public schools funding (the school foundation formula). But the budget still has $2,857,675,255 for elementary and secondary education.
He has withheld $43,396,533 for higher education performance funding. But that was a new program, not a reduction to an existing program.
Some departments, such as Education, Mental Health, and Social Services seem to be hit hard. That’s true. They bore the brunt of much of the financial cutting that had to be done during the recession, too. And the reason is simple: Those are where the state spends the most money and therefore, they will lose the most funding. You can’t withhold or veto $1.1 billion by reducing funding to state agencies such as Corrections, which has a total budget of $725 million. An unknown newspaper reporter is the one who coined the idea that you have to go where the money is to get money. (He appears to have made up the phrase often attributed to bank robber Willie Sutton.) So the Governor had to cut the budgets of agencies with the most money to get his $1.1 billion.
The total amounts withheld and vetoed include federal funds Missouri would receive as matching funds for appropriations of state money that Nixon has vetoed or withheld. If Missouri isn’t spending its own money, the federal matching funds are not needed.
The Governor has focused on dealing with general revenue money for the biggest part of his budget actions. General revenue consists of income and sales taxes, and corporate income and franchise taxes.
Both legislative Republicans and Governor Nixon admit state income has fallen short of the amount they forecast while the budget was being written. A lot of things change in that long process.
Remember that the state budget process for the fiscal year than begins July 1 actually began LAST July when the state budget office told state agencies to start putting together their proposals for Fiscal Year 2014-15 (known in government circles as FY2015). That information was due back in the state budget office on October 1. 2013. That’s nine months before the approaching fiscal year. So the Governor started his first review in October and honed his recommendations that he gave the legislature in late January this year.
Late last year, November or so, the Governor’s budget office and budget officials from the House and the Senate tried to agree on how much revenue the state would have for the budget that goes into effect next week. The legislature and the Governor did not agree this time so the legislature worked with its figures but created a separate funding category into which money would be put if the Governor’s higher revenue estimate came true. That money would be the basis for a mid-year appropriations bill early in 2015. It does not appear that contingency fund will have money put into it, though, because tax income is falling short of expectations.
Regardless, the legislators who wrote the budget after the Governor made his recommendations knew they were likely to be dealing with a moving target. The legislative procedure is the same year after year. The House writes the first draft of the budget and sends the bill to the Senate, usually about the time of Spring break in March. Remember they’re still more than three months away from the start of the fiscal year. But they do have some later information than they and the Governor had in January. The Senate, with even more updated information, does its version of the budget with most of the work coming in April. Then negotiators, again with updated information, work out the final compromise version.
The legislature, by state law, must agree on a budget a week before the end of the session. The date for budget completion this year was May 9th. still 53 days before the fiscal year begins.
Governor Nixon issued his vetoes 46 days later, just a week before the start of the new budget year, basing his withholdings on the latest assessment of state finances and budget office’s estimation of the effects on state income of bills passed by the legislature.
That assessment includes the impact the Governor’s analysts think the tax break bills passed on the last day will have. And that’s part of the conflict between the Governor and the legislature. He is saying they will reduce the availability of funds for this budget. The budget chairs we’ve talked to say, no, they will have an impact on the amount of money available for the budget that goes into effect on July 1, 2015, a year from now. Nixon sees the bills as a problem THIS year. The Republican budget people are telling us the tax credit reductions will affect the NEXT budget.
That argument aside, the issue for the legislature is, “what to do in the September veto session about the Governor’s vetoes.”
If Republicans really believe they are right about their tax break bills not affecting the new fiscal year’s budget, they’ll try to override the vetoes of those bills and the vetoes of budget items. They’ll need a little Democratic support in the House to make their efforts work there and the Republicans in the Senate have to stick together for any overrides to be successful. If they succeed, they are responsible for results that we won’t know about until next Spring when the income tax season rolls around. If things are okay then, the Republicans can do a lot of chest-thumping. But if they are wrong and if the Governor’s worst-case scenario is played out, they’ll be going into the 2016 campaign year with some substantial baggage.
What Governor Nixon has done is build his bully pulpit a little higher as he goes from town to town talking about the dangerous situation he says the Republican-led legislature has created–and that’s a message that could help Democrats in legislative elections in November. House and Senate budget chairmen, acutely aware of that situation, have asked the Highway Patrol to stop flying him around, a suggestion that makes news but is unlikely to change anything because guess who is, in effect, the Commander-in-Chief whose executive branch includes the Department of Public Safety, the home of the Highway Patrol. But the budget chairmen would be remiss if they did not at least complain.
The Democrats don’t think they can regain control of the House and the Senate this year. But if they take away the Republicans’ two-thirds majorities, they can limit veto override threats for at least two years and could have increased influence in the writing of legislation. Not a lot, perhaps. But some.
So that’s kind of a PoliSci 101 look at what’s going on.
There are a lot of other shadings and subtleties involved but this is probably about as much as the average citizen can take. So we’ll dismiss the class. And we’ll meet again when the instructor decides it should be re-convened.

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