Update (April 21, 2022): This story has been updated to reflect the House’s passage of the bill.
A $46 billion budget package passed out of the Missouri House earlier this month, after federal funds left the state flush with cash. The Republican-led House sent the Senate a budget proposal that leaves nearly $2 billion unspent and are now considering new proposal to spend some of the state’s surplus: a $500 nonrefundable tax credit for residents who paid income taxes in Missouri in 2021.
Democrats from the Kansas City area and Republican Gov. Mike Parson are eyeing those funds for mental health care, pay boosts for teachers and other causes. Leaders of the GOP-controlled Senate, meanwhile, say they have their own ideas about how to take advantage of the rare surplus. All of the differences will have to be resolved in the next few weeks, before the legislative session is set to end on May 13.
The House’s tight-fisted budget approach is at odds with priorities set out by Parson. His budget proposal included a starting pay raise for teachers across Missouri, expanded dollars from the federal government for cities and localities to use on infrastructure projects and a new hourly minimum wage of $15. None of those wishes was fully granted.
Surplus drives possible tax credit
The proposal for a stimulus for Missourians came from the House budget chair, Cody Smith, R-Carthage, and has some bipartisan support, with caveats.
The bill would award a tax credit of up to $500 for single filers or $1,000 for joint filers.
The exact cost of the tax credit proposal isn’t known. At least $1 billion of the general revenue surplus would be allocated to pay for the tax credit, although the cost of the proposal could reach up to $3.5 billion.
The bill is similar to one proposed by Democrats in the House. But that measure, introduced by Rep. Kevin Windham, D-Hillsdale, would have given $1,000 to low- and middle-income families that met certain criteria, such as unemployment, housing insecurity and child care needs.
Another issue for some: The credit proposed by Republican House leaders isn’t refundable. Rep. Maggie Nurrenbern, D- Kansas City, said the proposal leaves behind those on a fixed income, like those using Social Security.
“A fundamental flaw of that proposal was that it was not a refundable tax credit. So, with it just being those who have a tax liability, it does not address the needs of those who live on a fixed income,” Nurrenbern said.
Although she said the GOP-proposed tax credit was better than leaving money unspent, Nurrenbern said she would have preferred other uses for the surplus.
“I really wished we would have put this into higher education, into getting professionals into fields that are really lacking workers,” she said during the hearing on April 12.
A similar tax credit proposal is alive in the Senate, although that credit would be refundable. The House passed its proposal out of the body on Thursday on a 103-44 vote.
But additional dollars may not be as bountiful after the Senate finishes its attempt at the budget. Senate Majority Leader Caleb Rowden, R- Columbia, said last week that it was unlikely all of that surplus money would be left on the table.
“It’s going to be a different budget process than the ones we’ve seen,” Rowden said. “I think we’ll end up in the right spot and, hopefully, do the very best we can to take advantage of this moment. I do not think we will leave $1.8 billion on the bottom line, I can probably say that with some level of certainty.”
Democrats hoped for more action on Department of Mental Health funding
With the coronavirus pandemic exposing needs in mental health care across the country, and advocates worrying about consistent understaffing and turnover within the Missouri Department of Mental Health, Democrats hoped to see additional funds go toward boosting pay to help recruit and retain workers.
According to the Kaiser Family Foundation, Missouri ranks 51st among the United States and territories for meeting mental health staffing needs. As of April 1, the research shows that more than 2 million Missourians live in areas without access to mental health professionals, and the state meets only 9.7% of its needs.
Like many crucial services of state government, the Department of Mental Health is facing severe understaffing, with mandatory overtime leading to flight from the job, according to testimony from Director Valerie Huhn in January.
Huhn said delaying the governor’s pay raise meant risking the loss of even more state employees. Within one of the state’s supplemental budgets this year, employees got a 5.5% raise, but only some hourly employees are set to receive the $15-an-hour minimum wage. Others will have a $12-an-hour base pay.
House Democrats also unsuccessfully sought an expansion in mental health services for education and health care workers, as well as those suffering from substance use disorders and for staff assisting those living with behavioral and mental health disorders.
Rep. Patty Lewis, a Democrat from Kansas City, took to Twitter to express her dismay. She sits on the mental health policy research subcommittee, which listened to hours of testimony about the “mental health crisis” in Missouri.
“I am so sad and disappointed,” Lewis said in her tweet, after several legislators offered budget amendments to better fund mental health and were voted down. “… we are sitting on $1.8 BILLION and the Rs are turning their backs on mental health.”
In the department’s 2022 legislator briefing, the list of critical issues was lengthy, including: staffing crisis, access to care, state inpatient facility capacity, transportation and housing, among others.
Some wins for education, but cuts on starting teacher pay
Gov. Parson made raising starting teacher pay to $38,000 a top priority in his budget proposal this year, but that proposal was shot down, leaving the required minimum starting teacher pay at $25,000.
Democrats warned that low salaries for teachers and other state workers would drive people out of those professions — or out of the state entirely.
“We have some of the lowest paid teachers, nurses, hospital staff. We need to make sure that they stay here and that people move to Missouri to help out,” Rep. Emily Weber, D-Kansas City, told The Beacon.
Democrats were able to amend a budget bill to include the teacher career ladder program, which hasn’t been funded since 2010. With that move, $21 million was allocated to give experienced teachers up to $5,000 a year in extra pay.
The House did choose to fully fund the state’s education formula, but Nurrenbern warned that the model hasn’t been adjusted since 2007.
“We’re investing at levels of education that are below 2007 levels,” she said. “We haven’t adjusted for inflation. When we do that we are funding education today…below 2007 levels.”
“I think we’re putting a really tremendous burden on our local school districts to make tough choices when we have billions of dollars sitting in our state treasury,” Nurrenbern added.
In higher education, scholarship programs were a bipartisan success, as the House voted to guarantee maximum payout to Missouri students in the coming year. Colleges and universities were awarded the governor’s recommended increase of 5.3%.
Infrastructure sees cuts from governor’s recommendation, but federal funds set to bolster overall response
The $2.68 billion that Missouri will receive from the American Rescue Plan Act is funding a number of large statewide projects, including improvements for lead pipes, broadband expansion and community grant projects.
Missouri has to allocate these funds by 2024 and spend them by the end of 2026. The needs are enormous.
According to the American Society of Civil Engineers’ 2021 report card for America’s infrastructure, the state shortchanged its drinking water infrastructure by $8.9 billion over the last 20 years. Because of the difficulty in securing additional sources of funding, “investment in drinking water infrastructure continues to be insufficient, resulting in systems that are plagued with service interruption from main breaks, microbial contamination and inadequate capacity.”
Kansas City Mayor Quinton Lucas has in the past expressed concerns about too much oversight coming from Jefferson City when allocating the federal relief.
“Our push in Kansas City is to make sure that it goes directly to the city, rather than stopping in Jefferson City — or for our Kansas allies, Topeka — and getting those direct expenditures,” Lucas said in November.
In his recommendations for the American Rescue Plan money, Parson suggested that $250 million go directly to localities through community development grants. The House cut his proposal to $50 million.
The governor also allocated $411 million in his budget for a lead abatement project, which appeared to be on the chopping block but was ultimately saved. The House budget sets aside $27 million for filtration and remediation of lead in water in schools.
Weber, who has pushed for more money in the budget to meet infrastructure and other needs, said she hopes the Senate will “do the right thing.”
“I have to say I love Kansas City and my district. They look towards the future and investing in Missouri,” she said of the state’s surplus. “In Jefferson City, it’s a little bit different.”
Weber added: “We have the funds now to invest in the future for Missouri. I have hopes that they will do the right thing and fund the things that need to be funded, and fight for the things that the governor wanted in there – and also the things that our communities need.”
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