Gatschenberger: Missouri's Budget, End of Session Legislative Summary and Town Hall Invitation

Town Hall Report

As promised… the following is a summary of the budget information covered at our last Town Hall Meeting.   Although the material may be a bit technical, I believe it is worth your time to understand our State's Budget.  If you have questions, please don't hesitate to contact my office.

I. FY 2011 MISSOURI STATE BUDGET SUMMARY (May, 2010)

State Fiscal Year 2011 (July 1, 2010 – June 30, 2011)

Total Missouri State Operating Budget	$23,274, 922,486
State General Revenue	7,260,461,973
Federal Budget Stabilization (unrestricted)	572,388,526
Federal Budget Stabilization (education)	287,037,940
Federal Funds	7,035,061,286
Other Funds (Highway & Road Funds; Lottery & Gaming Proceeds; Conservation, Parks Soil & Water; Outstanding Schools Trust Fund, etc)	8,119,972,761

That $7.3 billion Net State General Revenue is derived from:

• $4.8 billion or 66.4% from Individual Income Tax
• $1.8 billion or 24.4% from Sales and Use Tax
• $0.4 billion or 4.9% from Corporate Income Tax
• $0.3 billion or 4.3% from Other Taxes

Largest Expenditures of Net State General Revenue:

• $2.8 billion or 38.9% for Elementary & Secondary Education
• $2.3 billion or 31.9% for Social Services, Health & Senior Services and Mental Health
• $0.9 billion or 12.5% for Higher Education

II. Missouri State Budget History

Normal/Average Net State General Revenue (GR) growth is + 3 to 4% more than the previous year's collections.  Over the last 10 years, it has been as low as (-) 3.2% in FY 2002 and as high as +9.2% in FY 2006

In FY 2009, last year, net tax collections dropped by what was at that time, was "the largest percentage drop" of minus (-) 6.9% below the previous year's revenues.  This drop resulted in actual net GR collections for FY 2009 of $7.4 billion, which is equal to the amount the state collected in FY 2006.

Missouri's Constitution requires that the Governor use line-item vetoes and/or withholding of funds from state agencies and programs when actual revenue collections drop below budgeted collections.  In FY 2009, the Governor withheld and reduced spending authorizations by $272.0 million.

The FY 2010 budget that we are currently getting ready to end on June 30 was built on estimated revenue growth of positive + 1.0%.  However, our national and state economies, driven by record unemployment of nearly 10%, have resulted in revisions that net GR collections could drop by more  than minus (–) 9.0%!  As a result of this shortfall, the Governor has vetoed or withheld more than $900.0 million of GR expenditures by state agencies and programs this year.

The American Recovery & Reinvestment Act of 2009 has provided one-time Federal Budget Stabilization and targeted one-time Federal Stimulus Funds to the states.

Federal Budget Stabilization Funds (FBS) are provided over a 27-month period from Oct 2008 thru Dec 2010.  These one-time funds total approx'ly $2.4 billion that have been used to shore up the state budgets for (last year) FY 2009 and (this year) FY 2010.

Federal Stimulus Funds totaling another $2.6 billion are available for one-time "targeted and competitive" grants for state and local programs such as: job training, law enforcement, energy projects, unemployment benefits and broadband.

III. Special Circumstances for the FY 2010 Missouri State Budget

The original revenue estimate made 18 months previous for the FY 2011 budget was an optimistic + 3.6%.  However, as a result of the drastic reductions in state revenue in FY 2009 and 2010, the more recent revised estimate is a modest +2.2% growth on a much lower base of $6.7 billion of net GR in FY 2010.

On January 20 of this year, the Governor recommended a budget for FY 2011 that assumed the + 3.6% growth.  His spending proposals also included use of an additional $300.0 million of one-time "Extended" Federal Budget Stabilization Funds above and beyond the 27-month period of the 2009 American Recovery & Reinvestment Act.   These additional one-time Extended Federal Budget Stabilization funds had been proposed in federal legislation, but have not yet been approved by Congress.

In March, the Governor asked the House and Senate Budget Committees to cut the budget he proposed for FY 2011 by $500.0 million.  The Governor's request to the General Assembly was to cut $200.0 million due to the FY 2011 revised general revenue estimate from + 3.6 to + 2.2% and his acknowledgement that the state may not receive the $300.0 million of Extended Federal Budget Stabilization Funds that he had included in his budget.  The House and the Senate worked together to make the very difficult and unpopular decisions to cut $484.0 million of GR from the FY 2011 budget that was proposed by the Governor in January.

In May, the Governor announced that he plans to cut $350.0 million more from the FY 2011 budget approved by the Legislature because some proposed budget-related legislation did not pass, the administration does not agree with some assumptions in the appropriations and monthly collections continue to fall below estimates.

IV. Challenges to the FY 2012 Missouri State Budget

The one-time Federal Budget Stabilization Funds totaling $860.0 million (see page 1 – the $572 million and $287 million) will be gone after the state FY 2011 budget.

Even if we get the Extended $300.0 million of FBS, we still have somewhere between $560 to $860 million MORE TO CUT from the base of the FY 2012 budget before we can even consider the increases that will be requested for the School Foundation Formula, Higher Education, Medicaid , Corrections, Public Safety, etc.

V. Highlights of the FY 2011 Missouri State Budget

• Flat funding for School Foundation Formula ($3.4 billion from all Funds)
• $15.0 million reduction to Foundation Transportation ($153.0 million)
• 5.2% or $50.0 million reduction in direct aid to Higher Education Institutions and Community Colleges ($911.0 million)
• $13.0 million cut in funds for Access Missouri need-based Scholarships ($83.0 million)
• $20.0 million reduction to state employee benefits
• $6.0 million reduction on Biodiesel subsidies ($13.4 million)
• $6.0 million reduction to Tourism ($13.9 million)
• $7.5 million additional for Corrections inmate health & mental health care ($136.6 million)
• $5.6 million additional for caseload growth in the Dept of Mental Health
• $16.5 million additional for Medicaid Home & Community Services in the Dept of Health & Senior Services
• $30.6 additional for Medicaid caseload growth in the Dept of Social Services

Please be my guest!

What:  Town Hall Meeting
When:  Thursday, June 24^th – 7:00 pm
Where:  Wentzville City Hall – 310 W Pearce Blvd
Why:  Information on what the University of Missouri Extension Office can do for you as an individual… or as a small business. Scott Killpack from the University of Missouri Extension Office in St. Charles County will explain what is available and how you can take advantage of their services.  For example… did you know they can help you with your yard problems?  Your health & nutrition questions?  Your small business ideas?  Your needs as a dislocated worker?  Your family financial maze?

Also, James Gremaud from the Missouri Department of Transportation will be on hand to give you an update of MoDot projects in the 13^th District and get your thoughts on Truck Lanes.

You won't want to miss this very important information session… so please mark your calendars now!

More than 70 people attended my last Town Hall Meeting in Wentzville

For questions on the content of this meeting you may contact my Capitol office at (573) 751-3572 or e-mail me at Chuck{dot}Gatschenberger{at}house{dot}mo{dot}gov

Legislative Update

1. Ethics Reform

Senate Bill 844 is an ethics reform package designed to increase transparency and accountability in the political process. One provision of the bill addresses the issue of political money laundering by restricting committee-to-committee transfers of campaign donations. The bill limits the number of political committees and makes it a crime to transfer committee funds with the intent to conceal the source of the original funds.

The bill also gives additional authority to the Missouri Ethics Commission to launch investigations. Under current law, the commission can act only after receiving a complaint. Senate Bill 844 allows the commission to launch an investigation after a unanimous vote of all six commission members. The bill also creates the crime of obstructing an ethics investigation.

In addition, the bill requires that campaign contributions made during a legislative session in excess of $500 be reported within 48 hours. The bill also makes it a crime for an elected official to offer a job to a lawmaker in exchange for votes. Senate Bill 844 also creates new crimes for lobbyists who do not properly report how much they spend on meals and gifts for state officials.

2. Stronger DWI Penalties

House Bill 1695, 1742 & 1674 creates stronger penalties for DWI offenders. The bill requires drivers with blood-alcohol levels of at least 0.15 percent to spend 48 hours in jail, and those with at least 0.2 percent to spend at least five days in jail, unless they complete the requirements of a DWI court or docket or other court-ordered treatment. In addition, the bill allows any circuit court to set up a DWI docket or court for repeat offenders or those whose blood-alcohol content exceeds 0.15 percent. Several Missouri courts already offer DWI Courts, which allow repeat DWI offenders to avoid jail time while receiving treatment for alcohol abuse.

The bill also requires state courts to handle any DWI case involving a defendant with two or more alcohol-related contacts with authorities or intoxication-related traffic offenses, requires police and prosecutors to adopt policies for reporting information on DWI offenses to a central databank, increases the minimum jail time for previous DWI offenders from five to 10 days, and increases the minimum jail time for a persistent offender to 30 days.

3. Autism Insurance Reform

House Bill 1311 & 1341 requires state-regulated group insurance policies to provide coverage for children with autism spectrum disorders. The legislation requires group insurance policies to provide coverage for applied behavioral analysis services (ABA) for autistic children age 18 and younger. The coverage will have an annual cap of $40,000 and will be adjusted at least once every three years for inflation.

The bill also establishes a state Behavior Analyst Advisory Board under the State Committee of Psychologists within the Division of Professional Registration. The new board will be charged with establishing and overseeing licensure and registration requirements for behavior analysts and assistant behavior analysts who provide therapies for children with autism spectrum disorders.

In addition, House Bill 1311 & 1341 provides an exemption to businesses with 50 or fewer employees that show the mandate increased their premiums by at least 2.5 percent compared to the previous year.

4. K2 Ban

House Bill 1472 adds a type of synthetic marijuana, commonly known as K2, to the state's list of controlled substances. The synthetic cannabinoids contained in K2 are very closely related to tetrahydrocannabinol, or THC, the chemical in marijuana. However, because the chemicals in K2 are slightly different than THC, they are not covered by existing drug laws. Currently, Missourians of any age can buy K2 packaged as "potpourri" at many stores that sell tobacco products.

House Bill 1472 adds the synthetic cannabinoids used in K2 to the Schedule I list of controlled substances. Schedule I drugs include substances such as heroin and marijuana. Under the bill, possession of 35 grams or more of K2 is a felony offense. Possession of a lesser amount is a misdemeanor.

5. Strengthened Informed Consent Requirement

Senate Bill 793 strengthens the state's informed consent requirements to obtain an abortion. The bill expands current law, which requires that a woman seeking an abortion be told of the physical and psychological risks of the procedure 24 hours prior to the abortion being performed. Senate Bill 793 requires that a woman seeking an abortion also be given the opportunity to view an ultrasound image and listen to the heartbeat of the fetus. The bill also requires the consultation be done in person instead of over the phone. In addition, the legislation requires that women receive a description of the "anatomical and physiological characteristics of the unborn child and requires abortion providers to supply a brochure produced by the state that proclaims: "The life of each human being begins at conception. Abortion will terminate the life of a separate, unique, living human being."

Senate Bill 793 also prohibits insurance coverage for abortions under policies offered through any health insurance exchanges, such as those located in the federal health care legislation. In addition, no health insurance exchange operating within Missouri will be allowed to offer coverage for elective abortions through the purchase of an optional rider.

6. Sexually Oriented Business Regulations

Senate Bill 586 & 617 enacts new regulations for sexually oriented businesses. The bill requires sexually oriented businesses to be at least 1,000 feet from schools, churches, public parks, daycares, public libraries, residences, and other sexually oriented businesses. It also places restrictions on nudity, hours of operation, alcohol sales and employees' proximity to patrons.

The bill bars nude activity and restricts semi-nude activity within sexually oriented businesses. It also bans the use, sale or consumption of alcohol within such businesses. In addition, the legislation prohibits adult establishments from operating between the hours of midnight and 6 a.m., and bars anyone younger than 18 from being on the premises at any time.

7. Health Care Freedom Act

House Bill 1764 will put the issue of federally-mandated health care on the ballot for Missourians in August. If approved by voters, it would prohibit federal law from forcing a patient, employer, or health care provider to participate in any government or privately run health care system.

8. College Scholarships

Senate Bill 733 addresses the discrepancy between scholarship money available to private and public school students through the Access Missouri program. Under current law, students who attend private and public schools are eligible for disparate award amounts. Senate Bill 733 raises the maximum scholarship to $1,300 for community college students and sets it at $2,850 for students at either public universities or private institutions, starting in 2014.

Senate Bill 733 also modifies the Bright Flight scholarship program. Most significantly, the bill ensures that students who score in the top 3 percent with their ACT or SAT scores receive Bright Flight merit scholarship awards before those who score in the top fourth or fifth percent. Bright Flight eligibility will expand to the top 5 percent next year under a new state law.

In addition, the bill addresses students who elect to join the armed forces. These students who qualify for a Bright Flight scholarship may defer their award and receive it at a later date, as long as they return to full-time student status within six months of the end of their military service.

9. Downsizing Government

House Bill 1868 reduces the size of state government and authorizes the formation of a committee to study the potential for additional downsizing in the future. The bill will save the state millions of dollars by transferring the powers and duties of the State Water Patrol to the newly established Division of Water Patrol within the State Highway Patrol.

The bill also establishes the Joint Committee on the Reduction and Reorganization of Programs within State Government. The 14-member committee must publish a report by December 31, 2010, with recommendations for reducing, eliminating, or combining state programs and departments.

10. Veterans Omnibus Bill

House Bill 1524 & 2260 will make it easier for military members serving overseas to vote. The bill requires the Secretary of State to establish procedures for overseas voters to request voter registration applications and absentee ballot applications. The legislation also requires that at least one form of electronic communication for use by absent uniformed services and overseas voters must be designated for requesting voter registration applications and absentee ballots.

The bill also authorizes the governor to present a Legion of Merit Medal to individuals who have exceptionally meritorious conduct in the performance of outstanding military service and achievement reflecting honorably and creditably upon the state. In addition, the governor can present a campaign ribbon to individuals who have served in direct support of several military campaigns. The ribbons will include a Missouri Iraq Campaign Ribbon, a Missouri Afghanistan Campaign Ribbon, a Missouri Kosovo Campaign Ribbon, and a Missouri Vietnam Campaign Ribbon.

Other provisions of the bill specify that the State of Missouri recognizes the designations of Prisoner of War (POW) and Missing in Action (MIA) as valid descriptions of casualty status and category classification for military personnel; require the Adjutant General to establish the Missouri Youth Challenge Academy for at-risk high school age youth; and require all state agencies and political subdivisions to give a three-point bonus preference to a service-disabled veteran business operating as a Missouri business when letting a contract for the performance of any job or service.

11. Prompt Tax Refunds

House Bill 1408 & 1514 will shorten the time the state has to issue tax refunds to Missouri taxpayers. The bill will change the length of time the state can hold onto returns without paying interest from the current 120 days to 90 days.

Under the bill, the state will have 90 days from April 15 to process returns. For individuals who file late returns, the 90-day clock will start when the return is postmarked. Returns that fail to meet the 90-day deadline will be refunded with interest.

12. School Safety

House Bill 1543 contains a number of provisions focused on school safety and improving the working environment for school staff. The bill gives school boards more authority to establish discipline codes. It also expands immunity for school employees who follow established discipline policies. Another provision of the bill defines cyberbullying to include the use of computers, the Internet, and phones to bully a student.

The legislation also provides school districts with additional budget flexibility during times when funding is limited. For the next three fiscal years, the bill suspends the requirement that school districts spend one percent of state funding on professional development. The legislation allows a school district to spend the money at its discretion. The change will free up approximately $30 million in education funding for schools across the state.

13. Prompt Payment of Health Insurance Claims

House Bill 1498 requires the prompt payment of health insurance claims made by providers, as a response to the massive amount of unpaid claims Missouri hospitals reported in 2009. The "prompt pay" legislation will streamline the claims process and provide 45 processing days for claims to either be paid or denied. The bill will also implement a penalty of 1 percent of the total claim amount per day the claim remains unpaid past the 45-day window. In addition, the law will define a clean claim, which a provider must provide to an insurer for reimbursement, and remove the suspension provision currently in state statute that allows health insurers to delay payment by suspending a claim.

14. Unemployment Benefits Extension

In an effort to provide relief to as many as 35,000 unemployed Missourians, House Bill 1544 extends federal unemployment benefits to workers that have exhausted all state and federal benefits. The bill removes the December 5, 2009 expiration date for the extended benefits and instead allows unemployed workers to receive extended benefits as long as the federal government fully funds them or until March 3, 2011, whichever occurs first. HB 1544 also extends the Shared-Work program, which allows employers to reduce the work hours of full-time employees while the workers collect partial unemployment benefits to supplement their lost wages. The bill doubles the number of weeks, from 26 to 52, that an individual is eligible to receive shared work benefits

15. Telecommunications Access Rates

House Bill 1750 bill will gradually reduce the access fees many Missourians pay each time they make a long distance phone call within the state. Currently, when a customer in one part of the state calls a customer in another part of the state using a different phone company, a per-minute access fee is charged. While the FCC regulates the access rates for interstate calls, the state of Missouri is responsible for regulating access fees for long distance calls made within the state. The legislation will require large telephone companies to reduce in-state access fees by 6 percent of the difference with their interstate access rates for each of the next three years.

16. Women's Heart Health Program

House Bill 1898 will provide access to free heart disease risk screenings for many uninsured and underinsured women in Missouri. The bill establishes the Women's Heart Health Program within the Department of Health and Senior Services. The program will be established to provide heart disease risk screenings for uninsured or underinsured women between the ages of 40 and 64 who receive breast and cervical cancer screenings under the Missouri Show Me Healthy Women Program and have a gross family income at or below 200% of the federal poverty level. Screenings will be provided by health care providers currently offering services under the Show Me Healthy Women Program. The program is subject to federal funding.

17. Deadly Force to Protect Unborn Children

House Bill 2081 specifies that a pregnant woman may use deadly force to protect her unborn child if she reasonably believes that deadly force is necessary. The bill comes in response to a Michigan case where a pregnant woman was convicted of manslaughter for killing her boyfriend in defense of her unborn child. The case caused controversy in the Michigan state legislature, as members debated whether Michigan law allowed the woman to claim that she acted in self defense of her unborn child. The court later overturned the conviction and Michigan legislators passed a bill similar to House Bill 2081.

18. Child Abuse Medical Resource Centers and SAFE CARE

House Bill 2270 aims to improve health care for child victims of sexual abuse by educating more health care professionals on how to interact with abuse victims. The 17 medical resource centers that belong to the Sexual Assault Forensic Examination Child Abuse Resource Education (SAFE CARE) network will provide training for medical professionals on how to evaluate and communicate with child victims, and will provide evaluation services for victims as well. The legislation also will allow doctors at these facilities to get a second opinion by consulting with other doctors using advanced video technology. Currently, doctors are barred from sharing information about their patients with anyone, excluding law enforcement. This legislation comes as a response to the lack of health care professionals trained to evaluate child sexual assault victims in Missouri.

19. Girl Scout Day

Senate Bill 649 establishes Girl Scout Day in recognition of the Girl Scout program, which celebrates its 100^th anniversary in 2012.  The bill requires the governor to issue a proclamation each year setting apart May 12 as Girl Scout Day. The legislation also recommends that the people of Missouri observe the day in recognition of the Girl Scout program that "seeks to promote the social welfare of young women, build self-esteem, and teach values such as honesty, fairness, courage, compassion, character, sisterhood, confidence and citizenship through activities including camping, community service, learning first aid, and earning badges by acquiring practical skills."