Stouffer: Auditor vs. Governor on Managing State Finances

Budgets and Withholds: Show Me the Money

The state auditor has been looking into withholds the governor has been making in Missouri’s budget, and has found some troubling results. To understand what this means, it is important to know the history of why governors withhold funds in our state and the division of powers between the branches of government.

So far, the governor has withheld $170 million from the state’s Fiscal Year 2012 budget. The budget year started on July 1, 2011, and will end on June 30, 2012. A number of withholds were made when the governor signed the budget bills back in June, several weeks before the 2012 fiscal year even began. These withholds keep us from spending more money than we bring in — a unique concept in state government as compared to those in Washington, D.C. — because we have to have a balanced budget.

In his report, the auditor studied the accounting and legal basis for withholding $170 million from the Fiscal Year 2012 budget. Most of this funding came from education, senior health programs and children’s services. The audit found nothing in the Missouri Constitution to justify withholding this money. It is the Legislature’s job to have the final decision on where funds should be spent if adequate funds are on hand.

The governor says the money needed to be withheld because of the cost of cleanup in Joplin, after the deadly tornado that tore through that community in May. No one is questioning the severity of the damage and lives lost, but there are other ways to fund emergencies, without ignoring the normal process to handle the state’s spending.

The state constitution clearly states that the governor is allowed to make withholdings if revenues fall short of what was projected by the Legislature. However, the state budget director could not come up with any justification for withholding the $170 million. Moreover, the withholdings came nearly a month before the start of the current fiscal year. Since paying for disaster clean up can take years, there is plenty of time to assess what is needed, without trimming money now.

When actual revenues are less than revenue estimates, the state constitution allows withholding money, but not for unappropriated costs related to disasters. But, there are ways to pay for disasters without moving money around. For instance, there was a $159 million surplus in Fiscal Year 2011. Tapping into the Rainy Day Fund is also an option; it was designed specifically for this purpose.

The state auditor’s findings are very complete and very thorough. I hope folks will look at them and pay close attention. We do not want to set a precedent where any governor, in the future, negates the work of the Missouri General Assembly, for whatever reason. If that becomes the case, why even have a Legislature? You can read the full audit by clicking here.

Some of these questions will likely be asked during the upcoming special session. My hope is that lawmakers will take a serious look at what is happening, especially given the budget for the next fiscal year. We must continue to make the tough decisions, and I will continue to serve as a fiscally conservative watchdog of your taxpayer dollars.