Missouri Legislative Report, May 1, 2020
Missouri Legislative Update. May 1, 2020
The Missouri General Assembly returned to Jefferson City this week to complete the final three weeks of the 2020 legislative session. Many elected officials wore masks, while others did not. New procedures in the Capitol made for limited attendance by lobbyists and the public, and COVID -19 safety procedures somewhat slowed the legislative process. The Fiscal Year 2021 state budget passed out of the Missouri House, and the Senate Appropriations Committee will work Friday (today) and possibly Saturday on those appropriations bills.
The Missouri House also began creating very large bills that combined many issues into omnibus bills, making it difficult for Capitol regulars to track all of the changes. The Missouri Senate worked on a comprehensive judicial and criminal bill, but it quickly hit a roadblock. Two weeks to go in regular session, with the real possibility of at least one future special session to further refine the Fiscal Year 2021 budget.
Voluminous Substitute Bills In The House
On Tuesday of this week the floodgates truly opened to massive substitute bills that were funneled through only a few House Committees. In particular, bills were sent to the House Special Committee on Governmental Organization and Reform, chaired by Republican Representative Ron Hicks.
With Hicks at the helm, voluminous House Committee Substitutes for smaller Senate bills were adopted and also amended in the Committee. Many of these substitute bills will end up being two hundred to three hundred pages long. This action put the Capitol lobbying corps, most of whom were working from distance (outside of the Capitol) scrambling to figure out what was in the bills, and with few avenues to get objectionable issues out of the substitutes.
No exact reaction of yet from the Missouri Senate on this approach but they are now well aware that their legislation was loaded up and will likely look much different when they get sent back to the Senate in the next week to ten days.
End of April 2020 General Revenue Collections
April 2020 revenues were negative with a sharp downturn in the year to date collections. Revenues were impacted by the decline in business activity caused by the COVID-19 virus’s shutdown of normal daily life. The shutdown also coincided with the month of April, which normally has the largest monthly revenue receipts of every fiscal year, due to the April 15 annual tax filing deadline.
Month to date April 2020 net collections were -54.24%, and year to date collections are negative 5.67%. through April 29, 2020.
We should note that these numbers are also dramatically lower in part due to the order by Governor Parson delaying the April 15, 2020 tax filing date to July 15, 2020. Collections should be lower until that July 15 date comes, when there will be a more realistic picture of the true revenue shortfall. The delay does not impact a taxpayer’s taxes due, but rather the filing and payment dates.
Unlike the U. S. government, which has an October 1 through September 30 fiscal year, Missouri has a July 1 through June 30 fiscal year, which means that the tax filing delay moves revenues from state Fiscal Year 2020 into state Fiscal Year 2021. Thus, it is going to be very difficult to quantify the exact revenue shortfall until well into Fiscal Year 2021.
Fiscal Year 2021 Budget
The Fiscal Year 2021 budget was perfected and third read this week by the Missouri House. A combination of General Revenue cuts and reduced transfers to other funds brought the final budget roughly $700 million below the Governor’s budget request from January 2020.
As usual, the highest cuts to the budget came from higher education, which is normally the first place that cuts occur. The K-12 foundation formula was kept harmless, but K-12 transportation took a $17 million cut from the prior Governor’s recommendation.
No one knows exactly what the final budget will look like until the Senate completes their work and a budget Conference Committee occurs in the next week, but the most important action will be the adoption of a new revenue estimate.
In a small surprise, the Senate Appropriations Committee posted public notice of meeting on Friday, May 1 and Saturday May 2, in order to markup the FY 2021 budget. At this time there is some optimism that the Senate will be able to complete their committee mark-up on Friday (today) and avoid a Saturday meeting, but it is scheduled just in case it is necessary.
The Revenue Estimate
A frequently asked question in Capitol circles is, “How does the budget match up with the revenue estimate?” Readers may remember that the General Assembly and the Governor did not come to a consensus on the revenue estimate last December, and thus the budget was based upon the Governor’s estimates, which the COVID-19 outbreak has now made unrealistic.
A reasonable revenue estimate will have to take into account the depth of the revenue shortfall in Fiscal Year 2020, and some estimate of the duration of the current recession. The answers to those questions at this time is guesswork, and thus no new revenue estimate has been reached. No one is certain about how and when a consensus revenue estimate will be reached.
At this point no one is sure if the $700 million in cuts is enough to balance the FY 2021 budget or if it is simply a starting point. The cuts will likely be increased if there is no additional federal funding forthcoming to cover revenue shortfalls, or cuts could arguably be moderated if additional federal funding is received.
It seems reasonable to assume that additional budget consideration and action will be required within the next two quarters, but no one is sure exactly how that plays out. There is great fiscal uncertainty.
COVID-19 Funding Guidance
The working group chaired by State Treasurer Scott Fitzpatrick to provide guidance for the federal funds to pay for COVID-19 PPE, testing and treatment met on Tuesday of this week. Their meeting provides some very good guidance, but also makes clear that these funds are not a panacea for the State’s fiscal problems created by COVID-19. It has been made clear at this point that the federal funding is for direct COVID-19 expenditures, and not to cover any revenue shortfalls.
The Treasurer indicated that he is distributing roughly $521 million of federal funding to counties and the City of St. Louis (exclusive of Jackson County, which got direct federal funding of $122.7 million, and St. Louis County, which received $173.5 million in direct funding). Fitzpatrick also posted a local government certification form for CARES Act Funding on his website.
The new federal funding must be utilized to cover direct expenditures for COVID-19, and the guidance states the funds cannot supplant expenditures from previously appropriated funds. There will not be a direct allocation to cities (other than the City of St. Louis), and those cities will have to get any allocation of federal funds from their respective county’s allocation.
Funds will be allocated to the State Medicaid program, to provide increased funding to nursing homes through Missouri Medicaid, in order to cover additional COVID-19 expenses in those facilities.
The State will also “journal voucher” or charge these federal funds for prior state expenditures related to COVID-19 PPE purchases and other testing and public safety activities.
Judicial/Crime Bill Hits Senate Floor
On Monday, Senate Judiciary Chairman Tony Luetkemeyer got the week off to a rapid start by passing out a very expansive Senate Committee Substitute for House Bill 1450, an underlying bill that dealt primarily with expanded penalties for possession and sales of fentanyl. The bill was passed out of committee on Monday and then taken up on the Senate floor on Wednesday afternoon.
It was widely assumed by many observers that this bill might be passed quickly through the Senate, but the Senate debate quickly slowed when an amendment was offered by Senator Karla May related to racial profiling by law enforcement. The bill was ultimately laid over after a few hours of debate.
The Senate Committee Substitute contained some of the provisions advocated by the Mayors of St. Louis, Kansas City, Springfield, and Columbia that are tools for dealing with crime issues in those areas. Amongst the issues that are contained in this very expansive bill include, in part:
- Certification of juveniles
- Unlawful items in prison
- Hearsay evidence
- Pretrial witness protection program
- Hours to be held upon arrest
- State conspiracy statute
- Dangerous felonies
- Armed criminal action
- Street gangs
- Accessing House and Senate Bill Copies Electronically
To view House and Senate bill versions online, follow the link http://www.house.mo.gov/