Nixon wields budget axe after lawmakers approve tax breaks

Sep 16, 2016
Originally published on September 16, 2016 4:37 pm

Missouri's current state budget is taking another hit.

Gov. Jay Nixon announced Thursday that he's withholding $57.2 million from several state agencies and programs after lawmakers on Wednesday overrode vetoes he made on two tax breaks.

First, Senate Bill 641 creates a tax deduction for agricultural natural disaster losses "for all tax years beginning on or after January 1, 2014."  Senate Bill 1025 exempts instructional classes, including yoga and dance, from the state sales tax.  

Nixon, a Democrat, says the temporary budget cuts are entirely the fault of the Republican-controlled House and Senate.

"We just cannot be wrong on this; we do not want to turn into Kansas and end up being in a situation where you have issues," he said. "I've always been extremely clear to legislators that the tax breaks they passed must be accounted for, either in the budget they pass or in the action I must take."

Nixon told reporters that the bulk of the spending restrictions, $51.5 million, is the result of the agriculture disaster tax break, while the instructional classes tax break accounts for $5.7 million. He also said the new incentives would cause public school funding through Proposition C to drop by $1.9 million, bringing the total cost to $59.1 million.

"When they decide to spend money on tax breaks, that money has to come from other places," Nixon said.  "With the actions taken by the General Assembly, these cuts are real and necessary."

Education is taking the biggest hit, with $24.3 million in cuts combined to K-12 schools and higher education.  Funding for school buses is being reduced by $16.5 million.

But the Missouri Department of Transportation is taking the biggest single hit. Nixon has zeroed out the entire fiscal year's funding, $20 million, for the recently renewed cost-share program.

While the cuts are officially temporary, he told reporters that at this point it doesn't appear likely that they'll be restored before the end of the current fiscal year on June 30, 2017.

Republican leaders in the Missouri Senate are blasting Nixon's decision, including President Pro-Tem Ron Richard, R-Joplin:

"The reason for the recent withholds by the governor has nothing to do with the Legislature's actions last night. The effects of the bills overridden won't be felt for months if not years down the road. Missouri's most overridden governor in history combined is using our veto session successes as a smokescreen to blur the real problem the out-of-control growth in entitlement programs, especially Medicaid. Year after year, social services continue to see vast increases. The increase last fiscal year alone was at about 30 percent. Medicaid spending consumed every single dollar of (general revenue) growth for the year. This spending cannot continue if we want to strengthen our state's job market with programs that actually grow the economy."

Thursday's actions mark the second time Nixon has made temporary budget cuts since the new fiscal year began July 1. That same month he withheld $115 million, citing slower-than-projected revenue growth.

Follow Marshall Griffin on Twitter:  @MarshallGReport

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