House leader announces initial state budget proposal

BY EZRA BITTERMAN

MISSOURI NEWS NETWORK

House Budget Chair Cody Smith, R-Carthage, presented his fiscal year 2025 budget proposal Thursday, one that comes in at $50 billion — some $2 billion lower than Gov. Mike Parson proposed.

Despite that cut, most major priorities laid out by the governor are funded, including K-12 education, school transportation and pay increases to a state minimum of $40,000 for teachers.

All state workers would get a 3.2% raise under his plan, with some getting a larger increase for working in difficult to staff areas

Democrats noted that lottery money that’s meant to supplement education is being used just to fulfill the basic budget requirements. They also said that meeting the minimum K-12 funding requirement is not enough to support public education.

Smith also proposes allocating over $700 million to improving the Interstate 44 corridor, including increasing the lanes to six around Springfield, Joplin and Rolla. Those areas are also going to be the first to be worked on as the Missouri Department of Transportation has enough information to begin construction, Smith said.

Half of the funds for I-44 will be supplied by the general fund with the remainder provided through debt obligations. Smith also included $100 million for the improvement of rural roads.

Last year the legislature approved $2.8 billion in spending and bonds to expand Interstate 70 to six lanes across the state.

The proposal also included a 2% increase in funding for the University of Missouri, a little less than what the governor suggested

Smith’s main cuts came from a projection that the state would have fewer people on Medicaid and therefore did not need to appropriate as much money.

A $5 billion state surplus has been whittled down to less than $2 billion over the last few budget cycles. That surplus came from a large influx of federal COVID-19 funds, including infrastructure money which was used for the I-70 expansion.

Now that most of those federal dollars have been appropriated, Smith said he wants to bring the state back to within what it can afford from its own tax base. He also noted the sizable effects recent tax cuts have had on state revenue.

“We’re in a situation where we have a lot of cash, but our revenues have started to level off,” he said “We have some one-time money available to us, not unlike the last couple of years when that money has been mostly federal.”

“But the difference now is that we’ve cut taxes, and revenues have started to plateau,” Smith said. “So we’ve got…a big income tax cut.”

“And then Senate Bill 190 from last year, which was an income tax cut on Social Security benefits,” he added. “And so I think all in all, those are about $550 million with the tax cuts on this next fiscal year.”

“So we have to be careful not to overextend ourselves in a way that’s going to set us up for a shortfall at a later time.”

A lack of transparency in the budget process has drawn criticism from Democrats on the budget committee.

“This year we started early, and I’m not sure we saw any benefit from it,” Rep. Kevin Windham, D-St. Louis, said. He added that Smith had not communicated much outside of the budget hearing held a month ago.

Smith presented his budget proposal Thursday in a 30-minute hearing with limited opportunity for public comment. Representatives were only given until next Tuesday to submit proposed amendments.

Smith mentioned that the public usually doesn’t comment on budget bills. Last year only one public comment was offered during the budget process.

Smith also pushed back on the idea that this year’s new strategy of starting hearings early failed. He said that preparing the budget is such a labor-intensive task that even if he couldn’t get them out of committee quicker, that process did contribute to creating better legislation.