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 |
- $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
- $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 2006In 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 MeetingWhen: Thursday, June 24th – 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 13th 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