Budget Update by Rep. John McCaherty

We are one week away from the May 10 deadline for the state operating budget to receive final approval from the House and Senate and the two chambers continue to work to iron out our differences. Right now, the version of the budget approved by the Senate is larger than the version approved by the House, and appears to be out of balance. Interestingly, the chairman of the Senate Appropriations Committee had proposed growing our budget even larger and, from our perspective, even more out of balance.

The Senate’s proposal for a larger increase was based on the fact that the revenue our state has collected to date is well ahead of the projections agreed to by the House, Senate and governor’s office earlier in the year. In fact, the Senate Appropriations Chairman believes our state is on pace for a budget surplus of $400 million, which he believes we should plan to spend in the operating budget.

In contrast, the House has advocated for a more cautiously optimistic approach. We are extremely pleased that our state has had a few good months where revenues have far outpaced projections, but we can’t be certain this trend is going to continue. The truth is that we could see some slower months that bring revenues much closer to our initial projections. In that case we want a budget that doesn’t extend our state to a point that is financially unsustainable. In the words of our Speaker, following the path the Senate has laid out would not be “fiscally prudent, fiscally conservative or anything the House has done in the past.”

The negotiations took a turn for the better Thursday afternoon as we took up and passed an appropriations bill that impacts the operating budget for the current fiscal year, which ends at the end of June. After sitting down with the Senate and the governor’s office to go over the details, we agreed to dedicate approximately $121 million in one-time funding to make repairs at our state parks and at the state Capitol. The funds will also be used to begin the process of replacing the crumbling Fulton State Hospital. While these are repairs that need to be made, the most important news with this agreement is that we will potentially save more than $300 million for the next fiscal year.

It’s a move I support because it prevents us from committing the state to pay for long-term recurring expenses with money that may not be there down the road. Instead we take the money we think we will have and hold most of it in reserve for when we really need it. It is fiscally responsible budget and something I believe will position our state for a much more stable budget situation going forward.

Next week the negotiations on the budget bills for fiscal year 2014 will begin in conference. It’s my hope that we will see smooth sailing as the primary differences between the two chambers were resolved this week.

To listen to the House and Senate Debates, please click on the following link:

http://www.house.mo.gov/content.aspx?info=/link2/debates.txt