The House Budget Committee will hold a hearing next week to discuss whether Governor Jay Nixon’s proposed plan to fund a new Fulton State Hospital meets constitutional muster.

Representative Chris Kelly (tan jacket) asks a question of Budget Director Linda Luebbering during a hearing.  (photo courtesy; Tim Bommel, Missouri House Communications)

Representative Chris Kelly (tan jacket) asks a question of Budget Director Linda Luebbering during a hearing. (photo courtesy; Tim Bommel, Missouri House Communications)

Nixon proposes using about $189 million dollars in appropriation bonds to pay for replacement of the current hospital, whose current buildings date back as far as 1937 and is widely considered to be outdated and dangerous.

Nixon has proposed in his supplemental budget the first bond payment of $14-million dollars with another $14-million in the budget for the fiscal year beginning July 1 representing the second payment. Nixon Administration Budget Director Linda Luebbering says that would provide authority needed from the legislature to work with Missouri Development Finance Board to do the bonds. The House Budget Committee would be the first panel to have a say in whether to keep that money in the supplemental budget. 

Since before the Governor announced his plan, Representative Chris Kelly (D-Columbia) has called the use of appropriation bonds unconstitutional because they are approved by the legislature without the approval of voters.

Kelly voiced that concern Thursday in a House Budget Committee hearing, and told Lueberring he wants to know what the constitutional basis for such borrowing is.

Luebbering told Kelly, “We’ll have attorneys provide the entire committee with information about the previous Supreme Court case as well as other information.”

“Let’s do that in public,” Kelly responded.

Kelly quickly learned he would get his wish. Budget Committee Chairman Rick Stream (R-Kirkwood) and Luebbering talked after the hearing about finding a time to schedule that hearing.

Stream had previously said he is alright with the use of appropriation bonds for the project, but he told Missourinet that some of the concerns Kelly raised make him want to know more.

Particularly, Kelly told the committee that if a future legislature would fail to make a payment on appropriation bonds, the state’s AAA-bond credit rating would be impacted.

Kelly said it would, “go right down the sink, wouldn’t it? Taking with it the credit rating of every school district in every city in the state.”

That got the attention of Stream, a former Kirkwood School Board member.

“We issued revenue bonds a couple of times and it always went to a vote of the people,” Stream says of his time as a school board member. “I was going on the basis of what the Governor’s office had said about the constitutionality … that they’d checked it out already. Representative Kelly seems to disagree with that so we’ll get the people into the room, discuss it and then go forward from there.”

The Governor and Luebbering have noted that numerous state projects, including the construction of the Truman Office Building in Jefferson City and the Eastern Reception, Diagnostic and Correctional Center at Bonne Terre have been funded using appropriation bonds. Nixon also says that the state’s bond council has signed off on the plan.

Nixon also cites a ruling by the Missouri Supreme Court also upholds the use of appropriation bonds, but Kelly says he’s seen that ruling and believes it only supports the use of revenue bonds.