Governor Proposes New State Budget

Governor Parson unveiled his Executive Budget and delivered his State of the State address last week, and several hearings on Medicaid, the State Budget and Tax Issues were held last week and/or are scheduled for this week. Here are a few items of interest:

Medicaid Expansion – In his State of the State address, the Governor claimed that Medicaid expansion would cost Missouri taxpayers.

However, numerous studies have shown that expansion can actually result in savings to state general revenue funds. For example, a recent examination of the actual state budget impacts in five states that expanded Medicaid showed that “expanding Medicaid has either been a positive for the state’s general fund revenues or has not resulted in any additional cost to the state.”

Calls to expand Medicaid have increased this year due to the fact that since January 2018, 125,000 children and parents have lost Medicaid coverage in Missouri.

Budget EstimateGovernor Parson released his Executive Budget earlier this week, following the State of the State address. While the Executive Budget assumes 1.9% growth in FY2021, the House Budget Committee reportedly plans to develop its budget using a substantially lower estimate of state revenue growth.

In either case, the development of next year’s budget comes at a time of continued uncertainty and instability for Missouri. The growth shown in recent revenue collections may be misleading because they’re relative to a time of very weak collections.

In fact, when reviewed over just two years, MO collections didn’t even keep pace with inflation. That is, our state didn’t collect enough to pay for services at the same level they were two years ago, not accounting for an aging population that may need additional health, nutrition or caregiver services, or a larger number of kids in school.

The comparison to other states is even more glaring. Average revenue growth across the country was much higher than in Missouri, so those states were able to increase teacher pay, invest in workforce development, and save for a rainy day.

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