Nixon's budget proposal relies on $165M from other legislation

The Senate Appropriations Committee met today to discuss Nixon’s spending plan for the fiscal year that begins July 1. Nixon gave a formal overview of his proposal during his State of the State speech Wednesday night, calling for a $150 million boost in education spending, $10 million increase for public safety programs related to mental health and 2 percent pay increases for state employees, effective Jan. 1, 2014.

But it's not all done just by adding and subtracting within the standard budget framework.

“For the governor’s budget to work, there’s about $165 million worth of legislation that has to go through,” said Appropriations Chairman Kurt Schaefer, R-Columbia.

That's legislation outside of the dozen or so budget bills lawmakers will craft in the coming weeks.

Among changes that Nixon’s budget relies on:

• $56.6 million from legislation related to changes in the state’s “circuit breaker” tax credit.

• $51.8 million from a tax amnesty proposal that has been repeatedly shot down in the Capitol.

• $10.5 million that the state could collect through Internet sales taxes.

• And probably the most significant: Nixon’s budget relies on $46.6 million from the expansion of Medicaid – the health care program for the poor – via an optional provision under the federal Affordable Care Act.

Nixon made Medicaid expansion a key focus of his State of the State speech, but GOP leaders have repeatedly said that they don’t think expansion is the best option for Missouri.

No governor-backed bills have been introduced to expand Medicaid so far this session. State Sen. Jamilah Nasheed, D-St. Louis, has one proposal.

“We were hoping to have a little bit more discussion with the Legislature about what they might be willing to look at,” state budget director Linda Luebbring said. “Some of these things still need to be worked out before we draft legislation.”

The expansion would add an estimated 300,000 Missourians to the program. The federal government already pays part of Missouri’s Medicaid costs. Under the federal expansion proposal, it would pick up the full tab for new recipients in the first three years and continue paying most of the costs beyond that.

About 881,000 Missourians are now enrolled in Medicaid, which has varying degrees of coverage based on income. More than 60 percent are children, and 18.6 percent are people with disabilities.

The governor’s budget office estimates that the state would see a $300 million boost to its general revenue fund over the next three years if the Legislature expands Medicaid. Once the state’s costs kick in, savings from other programs and estimated new revenue would more than cover the cost of the expansion, according to the estimates.

Luebbring explained today that some of the savings would come through a shift in coverage for some adults.

As an example, she noted that the state pays a portion of the funding for programs for drug and alcohol treatment through the Department of Mental Health. If the individuals who get treatment through those programs qualify for the expanded Medicaid program, then the federal government will pay the total cost and the state will see savings.

The budget office’s estimates also rely on assumptions that the injection of federal money into the health care system will set off a domino effect of economic activity, leading to more revenues for the state. An economic impact study from the University of Missouri recently estimated that the Medicaid expansion would lead to the creation of 24,000 jobs in 2014.

But Schaefer and other members of the committee appeared skeptical.

“As we go forward, I think we’re going to have a lot of discussion about the assumptions that go into that – including all of the new jobs that supposedly are created and the tax revenue that produces,” Schaefer said. “This is not a three-year issue for this committee. It’s a long-term 10-, 15-, 20-, and beyond-year issue for this committee.”