Governor Jay Nixon has released $215-million dollars out of $400-million he withheld pending the fate of his veto of a tax cut bill. The rest is being held onto while his Budget Director considers the impacts of several issues.

State Budget Director Linda Luebbering

State Budget Director Linda Luebbering

The largest amounts of money released are $66.4 million for K-12 education, $45.7-million for Medicaid provider rate increases, $33.7-million for higher education and $23.1-million for the Department of Mental Health.

Despite this release of money for education, the Department of Elementary and Secondary Education says the foundation formula remains about $600-million below its target funding level.

Budget Director Linda Luebbering says there is now some uncertainty as to how much money Missouri will receive from the tobacco settlement this year. That issue was just raised yesterday by the Attorney General’s Office.

A 3-judge arbitration panel arbitration panel has ruled in favor of tobacco companies in claims that Missouri and five other states failed to diligently enforce state tobacco laws in 2003. That makes those companies eligible for a refund under the terms of the 1998 settlement.

“We were assuming we would have $130-million from the tobacco settlement for the current year, so the impact could be anywhere from zero to $130-million on the current budget.”

It is not known how much might be lost in the current budget, or when.

“We were only counting on $130-million so if it’s more than that it would have to be a loss in a future year, basically. It could be higher but for the current fiscal year the budget impact is $130-million. The way they do it, we don’t actually cut them a check. They just don’t send us new money, so it’s an offset.”

Other issues are related to legislation that either passed, or didn’t.

The budget drafters assumed nearly $52-million dollars with the passage of a tax amnesty bill and about $60-million related to comprehensive tax credit reform. Neither of those passed.

Those issues combined with the possible impact of the tobacco settlement ruling could add up to $217-million dollars in the Fiscal Year 2014 budget.

The legislature did pass a bill that offers a new way to corporations to claim taxes, and Luebbering says the administration believes that will have a negative impact on revenue at least in the short run.

“Revenue’s best estimate right now is around $29-million. How accurate that is and how much of that would occur in the current fiscal year, we’re still working through.”

The $185-million still being withheld is tied to capital improvement projects, most of those found in a supplemental budget bill, HB 19. Those amounts still being withheld include $60-million of $70-million appropriated for facilities maintenance and repair, $46.5-million of $50-million for renovations at the State Capital, $38-million dollars for a new Department of Transportation building on the site of the decommissioned Missouri State Penitentiary, $17.5-million of $20-million for State Parks, $11-million of $13-million for the design of a replacement for the Fulton State Mental Hospital.

The Governor is also withholding $1-million dollars to rebuild the Pike-Lincoln Technical Center. He had vetoed that line of the supplemental budget bill but the legislature overturned that veto yesterday.