Fiscal Year 2018 budget – Page 2 – Missouri House of Representatives Newsroom

Leading Democrat on House Budget Committee looks ahead to challenging FY ’18 process

State House members are doing groundwork on the Fiscal Year 2018 budget, ahead of the release by Governor Eric Greitens of his proposed spending plan. Mike Lear sat down with the ranking Democrat on the House Budget Committee, Michael Butler (St. Louis), to talk about his thoughts in facing what lawmakers say will be a difficult budget year.

Audio: Mike Lear interviews Rep. Michael Butler

Representative Michael Butler is the ranking Democrat on the House Budget Committee. (photo; Tim Bommel, Missouri House Communications)

ML: Let’s talk about the causes in a moment because I do want to get to that, but let’s start with where we are in the budget, and I think everybody agrees that there is a hole, that there is a – I don’t know if I’ve heard the word “crisis” yet – but it’s certainly a dire budget year. How do you deal with the situation that we’re in this year?

MB: “I think it’s first important to note how we got here. How we got to this budget hole and what I could call a budget ‘crisis’ is we are currently about $450-million dollars that we have to cut out of the budget for this year, and that is not because of the past governor and the past administration. It’s because of the legislature who controls the budget process. We’ve been hearing that the past administration is to blame but we have to include Republican majorities in both the House and Senate that actually create the budget.

“They have cut revenue for years and revenue is down. Expenses are barely up – are generally up for how they normally are, but because we aren’t taking in as much revenue because of plenty of tax cuts for the rich, and for businesses, and for specific special interests, are the reason why we don’t have enough money to provide services to people.

“We want to be a part of the solution. We’re going to help, but we’re in the minority. We didn’t cause the problem. We’ve spoken against the problem in many cases, and we can’t take the blame for something we did not do.”

ML: Since we’re talking about cause, we are going to hear a lot about Medicaid and the need to reform Medicaid, and that a lot of the costs [to the budget] are driven by Medicaid. What is the answer there? Is it a question of Medicaid reform?

MB: “Well, with a brand new governor who is just learning the budget and is late on giving us his idea of the budget – much later than any other governor in recent history – we have to remind him and other folks around the state how we got here. Part of how we got here, especially with Medicaid; when many members of the majority, the Republican party and the governor says that Medicaid spending is out of control, they made it out of control. They have cut Medicaid spending so much that it creates a system for poor people, Medicaid recipients, that can’t get to good care. They can’t get to their primary care doctors, which cost the system much less.

“In fact when primary care doctors have a choice to decide whether to take these patients, Medicaid patients, when they decide not to those folks are forced to take emergency room care which is much, much, much more expensive. And as we cut more – if we just say we’re going to cut more – we’re going to create more of that system. We’re going to create where folks either can’t get care, or can’t get care that the state can afford, and in the end folks are going to suffer, and many of the folks in poor rural areas that they represent.

“On the Democratic side we’re going to be sure we’re continuing to take care of people, putting people first and not special interests, and put people first, not just numbers on a budget. We believe that we should continue to make sure that folks can get good care and they can take care of their children as well, as Medicaid recipients.”

Earlier stories:

House Budget Committee warned of impending fiscal challenges

House Budget Chairman not optimistic going into FY ’18 budget process

ML: We have a new administration in Washington D.C. Is now the time to pursue Medicaid expansion if this state is going to do it, when we could be seeing changes or a repeal of Obamacare?

MB: “Now is the time. The time was three years ago when the federal government was going to reimburse us at 100-percent. Now is still the time because we believe that President Obama, and the facts show that President Obama had it right.

“In states where Medicaid was expanded Obamacare premium healthcare costs have decreased. We’ve seen premium healthcare costs once again decrease in states that expanded Medicaid. We’ve heard the governor and the new federal administration, new president, say that healthcare premiums are increasing, but they’re only increasing in states that didn’t expand Medicaid.

“So, we’re going to talk a little bit more about expansion of Medicaid and we know that we have facts on our side, and we have statistics on our side that show that if we expand Medicaid not only will poor folks and working class folks benefit, so will people that have premium healthcare.”

ML: What is the path forward, then, on this budget year, when we do get the budget from Governor Greitens and start to go through that … as you said $450-million I think is the figure that’s going to have to come out of it. How do you approach this?

MB: “We can’t raise taxes. We can’t take more from Missourians. What we can do are find ways as we will continue to do where government can work better, where we can use more technology. We are unfortunately going to have to make tough cuts to services that may be a benefit to a small amount of people or a benefit to a small amount of special interests. Unfortunately that may be just an extra service that government has done.

“As Democrats we’re not trying to raise taxes. We don’t have the power to. But we want to make sure we’re finding waste, fraud, and abuse, and we’re finding if there’s money that we’re not using in the state budget, that we’re being good stewards of the people’s money.”

ML: Do you think there are a lot of places in the budget like that?

MB: “I think there are very few. Democrats have been working very hard over the years to fix those things in the budget already and we’ve been successful, and we’re going to continue to do that.”

House budget committee warned of impending fiscal challenges

The Missouri House Budget Committee was given a wake-up call in its first hearing. First-year chairman Scott Fitzpatrick (R-Shell Knob) explained to its members the challenges they will face in crafting the budget for the fiscal year that begins July 1.

House Budget Committee Chairman Scott Fitzpatrick (photo courtesy; Tim Bommel, Missouri House Communications)

Fitzpatrick has said that budget could need to be trimmed by $500-million. Former Governor Jay Nixon (D) already restricted $201-million from the current budget, and Governor Eric Greitens (R) is expected to make further restrictions in it. Fitzpatrick said the items for which funding in the current budget is blocked likely won’t be appropriated in the Fiscal Year 2018 plan.

Fitzpatrick said some are describing the current budget situation as the worst since 1981.

In explaining how the state got here, Fitzpatrick said it began with a June marked by a drop in state revenue collections coupled with increased tax refunds to Missourians.

“We literally went from tracking at 3.2% growth for fiscal year 2016 on June 15 to being at .9% at June 30,” said Fitzpatrick. “I mean that’s a $200-million swing comparing one year to the next, in two weeks.”

Fitzpatrick said that is combined with continuing growth in Medicaid and costs in the Department of Corrections, including a growing likelihood that Missouri will need a new prison. He said those and other factors lead him to believe Missouri’s problem is with growing expenses more than it is with a lack of revenue.

“Since I’ve been here we’ve had, my first year we grew ten percent. The second year … we contracted one percent. The third year we grew almost nine percent and then this last year we grew one percent. If you average that across the four years that’s not horrible revenue growth,” said Fitzpatrick. “But the mandatories – the things that are in statute that people are eligible for like Medicaid have grown faster and that’s the challenge.”

The message, then, to members of the legislature – especially those on the budget committee – has been that there will be very little if any new spending in the Fiscal Year ’18 budget.

Another challenge is that the legislature will be starting the budget process differently than it has in recent years, in large part because Governor Greitens will not deliver his proposed spending plan as part of his State of the State Address next week. Unlike recent history, when governors have delivered their budget proposals with that address, Greitens’ plan will be released closer to February 1.

Fitzpatrick believes the fact that Greitens is building his administration from scratch combined with the gravity and complexity of the budget situation is behind the delay.

House and Senate budget makers base their proposed spending plans on that of the governor. Fitzpatrick said the delay could cause the House to change how it does some things, but he remains confident the legislature will pass a balanced budget by the Constitutional deadline of May 5.

“If we have to mess with our hearing schedule a little bit, start a little bit before [Greitens’] budget release on some of these departments that have fewer decision items and some of the ones that are commission-appointed directors and so forth, then we may have to do that. I’m going to try not to do that but we’ll do whatever we have to do.”

The House’s appropriations subcommittees will begin holding hearings next week.

Legislator exploring ways to improve state employee benefits even if pay hike not possible for FY ’18

The Missouri legislature could have a difficult time building a pay increase for state employees into the Fiscal Year 2018 budget, but there are other things it could consider to improve those employees’ benefits.

Representative Mike Bernskoetter chairs the Joint Interim Committee on State Employee Wages (photo; Tim Bommel)

The Joint Interim Committee on State Employee Wages has heard a follow-up report from St. Louis-based CBIZ Human capital Services. CBIZ studied nearly 38,000 of Missouri’s 50,000 employees. It’s already reported to the legislature that those employees are the least paid in the nation, with compensation more than 10-percent below what is recommended to compete in the job market.

The study said it would cost the state $13.69-million to bring more than 5,000 of those state workers’ pay up to the minimum CBIZ recommended to be competitive in the market. That would be a one-percent increase in the state’s payroll.

Committee Chairman Mike Bernskoetter (R-Jefferson City) said building that into the budget that legislators will propose over the next couple of months could be difficult based on what he’s heard from the House’s Budget Committee Chairman, Scott Fitzpatrick (R-Shell Knob).

“I’ve heard reports where he thinks we’ll have to cut $500-million out of the budget,” said Bernskoetter. “Hopefully it won’t be that bad but I guess we’ll see as they go through the process.”

Bernskoetter said he does believe that if there is enough money to increase state employee pay, it is among Fitzpatrick’s priorities.

“If the budget is the way he thinks it is it’s going to be tough this year, but he’s led me to believe he’s interested in improving state employee pay,” said Bernskoetter.

He said even if the state can’t begin increasing state employees’ pay this year, the study makes clear a path toward improving that pay.

“We have a blueprint for the future, so there is something in that,” said Bernskoetter. “We have a plan that hopefully we can implement in the future. If not this year, next year.”

Some of CBIZ’s other recommendations could be worked on this year, however. One is that Missouri replace its step-based system for awarding salary increases. A CBIZ representative called it “archaic,” and expensive to administer. Bernskoetter said he is reviewing proposed legislation to make that change.

Another recommendation is that Missouri return to requiring that an employee work five years to be vested rather than ten years. Bernskoetter liked that idea as well.

“Say we have Governor Greitens and he wants to bring in the best and the brightest … even if he was here for two terms – eight years – they would not get anything out of it other than their salary. They wouldn’t be vested,” said Bernskoetter. “That’s one way of compensating the best and the brightest. If we can’t at least give them a great salary, we’ve got a good benefit package.”

Bernskoetter would also like to see state employees given more flexibility, where possible.

“Obviously you have some places – the Department of Corrections – where you have to be staffed 24-hours a day and you can’t really be flexible. But if we can be flexible in certain departments – if people want to work 6 to 2, or if they can work from home, I think I need to sit down and talk to different departments and be more flexible with employees,” said Bernskoetter. “If we can’t give them a pay raise, then be more flexible with their schedule.”

CBIZ won a bid of up to $300,000 to conduct the pay study.

Our earlier stories:

House Members optimistic about taking first step in improving state employee pay

Legislators to learn more about state employee pay study at meeting next week

House Budget Chairman not optimistic going into FY ’18 budget process

The Missouri House’s Budget Committee Chairman said he doesn’t, “have a lot of optimism,” about putting together a budget for the fiscal year that begins July 1.

Representative Scott Fitzpatrick (photo; Tim Bommel, Missouri House Communications)

State revenue continues to come in more slowly than legislators and the governor projected when working on the current fiscal year’s budget. Shell Knob Republican Scott Fitzpatrick said that means when Governor-Elect Eric Greitens (R) delivers his budget proposal next month, it could call for little more than covering things the state is mandated to pay.

“The biggest challenge that he’s going to be facing is the increase in Medicaid and other mandatory programs, that basically have to be funded in order to pay the providers that are providing services to the people that are eligible under state law,” said Fitzpatrick.

He said if the legislature does not find a way to stem those costs before Fiscal Year 2018 begins, “I would anticipate seeing cuts to a lot of other programs in order to just pay the bills related to Medicaid.”

Fitzpatrick said under the fiscal circumstances in which Greitens will be taking office, “I think he’s going to be doing well just to be able to get us a budget that balances without relying on unreasonable revenue assumptions, then we’ll take it from there and hopefully make some policy adjustments this session that will allow us to curb some of those costs.”

State General Revenue growth in Missouri spiked briefly, earlier this week, at more than 4-percent, but again fell off to well below the roughly 5-percent said to be needed to fund the current fiscal year’s budget. Governor Jay Nixon (D) has, since that budget went into effect, withheld $150-million to keep it balanced. Fitzpatrick said without a major improvement in revenue growth, more restrictions will be needed. He called on Nixon to make them.

“If he wants to leave this state in a better spot than the way he found it he needs to make restrictions before he leaves office, but if he chooses not to do that then [Governor-Elect Greitens] will have to do that pretty much immediately upon assuming office,” said Fitzpatrick.

“Barring an unforeseen explosion in revenue growth for December, I would anticipate $200-million is around what this round of restrictions should be, and if things get worse from there then it could be possible that even more than that would be required,” said Fitzpatrick.

All this means that Fitzpatrick, as he enters his first year chairing the House Budget Committee, does not expect to make many people happy while playing his role in preparing the Fiscal Year 2018 budget.

“I’ve told everybody who’s come to talk to me about the budget this year that they shouldn’t expect anything good to happen,” said Fitzpatrick. “’Play defense,’ is kind of what I’ve told anybody whose job relies on a state appropriation because it’s going to be a tough year.”

Fitzpatrick said it will also be difficult to take care of his personal priorities: fully funding the foundation formula for K-12 education; boosting state employee pay; and accelerating the repayment of state debt.

As early as next week, members of Nixon’s administration will join members of the governor-elect’s staff in meeting with House and Senate budget planners to prepare a Consensus Revenue Estimate – a projection of how much revenue the state will bring in during Fiscal Year 2018 that they will base a budget plan on.