Key lawmakers say Missouri budget talks close to completion as deadline approaches

The most difficult Missouri budget process in years entered the final 48 hours before the constitutional deadline for spending bills with no final agreement on how much the state should spend in the coming year.

Missouri House Republicans, who hold an overwhelming majority in the lower chamber, caucused behind closed doors Wednesday afternoon for about 30 minutes for a progress report from Budget Committee Chairman Cody Smith. When he emerged, he said there are still several points of contention with the state Senate that need to be resolved.

“We are moving in a good direction,” said Smith, a Republican from Carthage running for state treasurer. “My priorities are the balanced budget, the bottom line, those types of things, and  as long as we can work within those parameters, working towards a solution, I think we’re in a good place right now.”

Senate Appropriations Committee Chairman Lincoln Hough said the remaining differences were over the wording of restrictive provisions, some of which set maximum rates for services such as child care and others that are more general, including a provision penalizing cities that enact immigration sanctuary policies.

Hough, a Springfield Republican running for lieutenant governor, said he still expects to meet the 6 p.m. Friday deadline for spending bills.

“I don’t know what the timeframe is or I would tell you, but I think we’re gonna be in really good shape,” Hough said. “We’ll be in really good shape getting to the numbers that we all want to be at, like within the (consensus revenue estimate) and a healthy cash balance to carryover for next year.”

Throughout Wednesday, there was anticipation that the Senate budget debate was at hand. The Senate convened at 9:30 a.m., then quickly recessed until 2 p.m. with Majority Leader Cindy O’Laughlin saying the debate would commence “if the budget is ready.”

It was not ready when the chamber reconvened. After several hours of work on other bills, and another recess, the Senate adjourned for the night without action on any spending bill.

The chamber is scheduled to return at 9 a.m. At that time, there will be 33 hours left to complete spending bills.

This week’s negotiations began with significant differences between the House and Senate on how much to spend overall, whether to dip into the massive state surplus for ongoing programs and which of more than 300 earmarked items will make the final plan.

The House-passed budget spends $50.8 billion, including $14.9 billion in general revenue. The Senate Appropriations Committee approved a $53 billion spending package, with $15.7 billion in general revenue. In the budget proposed in January, Gov. Mike Parson called for $52.7 billion in spending, with $15 billion coming from general revenue.

If the regular process was being followed, the full Senate would have already debated the budget and this week would be the time for final negotiations in a formal bipartisan conference committee with members from both chambers.

Instead, the rapidly approaching deadline means Smith and Hough have been negotiating behind closed doors, keeping Republican leadership informed but leaving House Democrats complaining they have been frozen out.

Democrats have been told nothing about the negotiations between Hough and Smith, said state State Rep. Peter Merideth of St. Louis, the ranking Democrat on the House Budget Committee. 

“This is just one more step in what has been the least transparent budget process in my time here,” said Merideth, who joined the House in 2017.

Democrats complained during committee work that Smith delivered his plan late, with little time to go over the details before being forced to vote. Republicans knew going into the session that the budget would have to navigate through the political ambitions of key players and the stall tactics of the Senate Freedom Caucus, Merideth said.

“We’ve known from the time we were elected what the deadline was,” Merideth said. “They’ve known from the beginning how to get it there. And again, Republicans have failed to do that.”

The deadline, a week before the end of the session, has been in place since 1988. Only once, in 1997, have lawmakers missed that deadline and been forced to complete the budget in a special session.

This year, the deadline is looming despite efforts that began in December to prevent last-minute votes. House appropriations subcommittees began meeting Dec. 5. But instead of sending its proposals to the Senate before spring break in mid-March, the House completed its initial votes on April 3, almost a week later than it did so last year.

Factional warfare in the state Senate, including a 41-hour filibuster last week, means the Senate has yet to vote on any spending bills except one that provides $2.2 million to support a National Guard deployment to the Texas-Mexico border.

Hough has been responsive to House Democrats, Merideth said, but the lack of participation in budget talks means they will be forced to choose between voting for the bills to help meet the constitutional deadline or voting against them because of uncertainty about what is included.

“We’re all aware that we’re likely to have to vote on something that we don’t know the details of,” Merideth said. “And that’s not good government and I think any one of us would be justified in a no vote.”

Hough said the process isn’t very different from previous years, lacking only the formality of a conference committee.

“Essentially, we’ve been conferencing right since last week,” Hough said. “We just didn’t go through the show of a formal ‘let’s all sit down and show you this’ conference on all these differences.”

 A key point for Smith has been to set ongoing general revenue spending at or below expected revenue for the coming year. After more than two years of double-digit growth in revenues, receipts slowed last year.

Growth continued, but at the reduced rate of 2.7% in the year that ended June 30.

The consensus when the year began was that revenues would decline slightly in the current fiscal year and remain essentially flat the following year. 

Growth so far has defied that estimate, with revenues growing at 2.7% through April 30. If that rate is sustained until June 30, it would add about $500 million in unexpected revenue to the state’s coffers and again in the following year.

Despite slower growth, the surplus of all funds available to lawmakers has not declined considerably in the past year. The state had $6.4 billion on hand on April 30, down from $7.8 billion at the end of the 2023 fiscal year. That does not include $1.4 billion set aside for construction on Interstate 70 or $300 million in a fund for major construction at the state Capitol Building.

One way Smith got the House budget total for ongoing spending below the estimated revenue is by designating $807 million in the operating budget as one-time expenditures. The list includes big items, like $373.5 million for improvements on Interstate 44 and $100 million for low-traffic rural roads, as well as small ones, like $18,395 for operational expenses of the Agriculture Business Development Division in the Department of Agriculture.

Smith also designated the 2% boost his budget included for higher education institutions and about $14 million for public school transportation costs as one-time spending. That is a signal that the money may not be included in the following year’s budget.

“Sustainability is the name of the game for me this year,” Smith said. “We need to have a balanced budget and by that I mean we need to balance our expenditures, our ongoing expenditures within the revenue estimates.”