Missouri Governor Jay Nixon announced $51 million in spending restrictions Wednesday, a move being taken within his last 35 days in office.
He’s withheld a total of $201 million for the fiscal year after previous restrictions in July and September.
Nixon claimed the economy has prospered during the eight years he’s overseen the state’s finances as he ran down a checklist of accomplishments. “We’re an excellently managed fiscal state, that’s balance sheet looks good, that’s in a growing economy, that’s leading the region in manufacturing” said Nixon. “12.2 percent increase in sales tax year over year, that’s a really good number. People are getting more confident and spending more money, and they’re working. So I think this economy is clearly moving in the right direction.”
The overwhelming majority of money in Wednesday’s announcement of spending reductions will be come from Medicaid – almost $43 million.
Nixon, a Democrat, claims the state faces challenges in financing the federal health care program because of actions by the legislature. “I wish we were, in the sense of what we were doing, where Vice President-elect Pence’s state was, moving forward on Medicaid expansion, so that you had more resources and more capacity all across the board. But this legislature decided not to do that, which has made it somewhat more challenging.”
Indiana, under its controversial “Healthy Indiana” program, expanded Medicaid through the Affordable Care Act to cover an additional 350,000 low income people within its borders. Unlike other state which have expanded the federal program, people in Indiana are required to pay a small fee for services.
Without Medicaid expansion in Missouri, lawmakers are looking at sharply rising costs to administer the program in the state. Republican House Budget Chairman Scott Fitzpatrick of Shell Knob says the cost of Medicaid and other related programs will grow by $550 million in the next fiscal year.
In addition to the Medicaid spending restrictions announced by Governor Nixon, nearly $9 million will be pulled from excess bonding authority. Nixon also shifted funding to free up money – $4 million – mostly for building renovations at Missouri State University and K-12 transportation.
The move to impose more restrictions is a response to revenues failing to cover the cost of state expenses. Nixon contends the shortage of money can be attributed to a steep drop in corporate tax collections, which he blames on changes in tax policy. “If you have a month in which there’s a 12.2 percent increase in sales tax, and your income tax is not great but is in a decent zone, and your employment numbers are up, but yet in a month you’re down 50 percent and in the year you’re down 27.6 on corporate…that’s the line that folks need to look at when they see what the challenge is here.”
Nixon claims no other Missouri Governor has made the kind of budget adjustments he has in his last year in office. He says he’s been in contact with Governor-elect Eric Greitens about managing the state’s balance sheet after the new year.