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MSU Working Through Governor’s Budget Withholding

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Credit: Scott Harvey

State entities are adjusting their budgets for the 2014 fiscal year after Gov. Jay Nixon’s recent decision to restrict millions in funding. Despite vetoing HB 253 in June, the Democratic Governor cited cost concerns of the bill, which could be overridden by lawmakers during their September veto session.

The $400 million withholding by the Governor accounts for four percent of many state agency operating budgets. At Missouri State University, that’s $3.1 million, according to President Clif Smart.

“In addition, he withheld 100 percent of the new money that the legislature had allocated for our Occupational Therapy Program, and increases in health-related programs in West Plains; and that’s $1,325,000. So for us it ends up being close to $4.5 million in withholding,” Smart said.

Smart stood alongside Nixon when the Governor announced his veto of HB 253 during a June 28 press conference in Springfield. The bill aims to cut personal income, business and corporate taxes. And while the university president is not opposed to tax reductions, one of his concerns is with how a piece of federal legislation, the Marketplace Fairness Act, would play a role.

“This bill contains a provision that if Congress, federally passes the internet sales tax, that without even knowing what that is, ultimately, this bill would put into place income tax cuts in Missouri that potentially look back multiple years and so could create an incredible hole in our revenue stream.”

He says if in fact MFA becomes law, evaluation of tax reductions in Missouri would seem logical at that time, not beforehand.  

Smart says he’s instructed officials “to be prudent” as they look toward new purchases and discretionary expenses “until we see if this is a short term or long term issue.” The Governor has indicated he would plan to lift the $400 million restriction if his veto of House Bill 253 is sustained.

Withholding of funds is not unprecedented, Smart says, and for this and other reasons the university has safeguards in place such as reserve funds to help offset a lack of funding. He recalls that it was just a year ago when lawmakers were able to secure flat funding for higher education after the Governor’s budget initially called for a 12.5 percent cut.

Reserves could come into play should a veto override be successful, as university officials still plan to move forward with a two percent across-the-board salary increase for employees that went into effect July 1.

“But you save for a rainy day, and this would be a rainy day, if for year five in a row we ended up with less money that what we had from the previous year.”

He adds that if there is less money regularly coming to the university from the state then the costs will shift more to the student. Should HB 253 become law; President Smart says the Executive Budget Committee will then reconvene to further evaluate the long term impact.

Learn more about MSU’s plan amidst the Governor’s budget withholding through the President’s blog, Clif’s Notes.

Above, hear the full conversation with President Smart, as part of our monthly program Engaging the Community.