Tag: Missouri State Budget

House Budget Committee weighs proposed pay hike for state employees

      The Parson Administration has made its case to the House Budget Committee for a proposed 5.5-percent pay increase for state employees. 

Missouri Budget Director Dan Haug testifies before the House Budget Committee (Photo: Ben Peters, Missouri House Communications)

      The committee heard from the administration’s budget director, Dan Haug, who outlined the motivation for the plan that would cost about $72-million including $41-million in general revenue.  It would set state employee pay at a minimum of $15 an hour and kick in February 1, if it can get through the legislature by then.

      Haug said Missouri must do something to respond to recent and rapid changes in the labor market. 

      “We’re getting to the point where if we have more vacancies and more turnovers we’re not going to be able to operate our state facilities,” said Haug.  He said some facilities with minimum staffing requirements, such as prisons and mental health facilities, have resorted to forced overtime to fill shifts. 

      “That’s not the way we want to run the state,” said Haug. 

      Haug said one reason for proposing a February 1 start date is that a stipend being paid out of federal money to state employees in some institutions came to an end at the end of December.   

“We feel like if we wait until July 1, which is typically when we would do a pay increase, when the new fiscal year starts, then we’re just going to keep bleeding employees and we’re going to get to those critical numbers where we don’t have enough employees to safely operate our correctional institutions and our mental health institutions and provide the quality of services that the citizens of this state deserve,” Haug said. 

“We’re just responding to the wage market that is out there.  We are trying to figure out what a market wage is that’s going to let us be competitive.  We’re not trying to set the market.  Honestly we’re not even trying to get to the middle of the market.  We’re just trying to get somewhere where we can be competitive and get people in and keep our good people,” said Haug. 

Most lawmakers seemed to agree with the desire to increase state employee pay.

“Let’s face it:  we’re in competition with McDonald’s right now, so obviously something has to break there, without a doubt,” said Representative Don Mayhew (R-Crocker).   

      Excelsior Springs Republican Doug Richey agrees, but he has an issue with setting a new minimum baseline of $15 per hour for state employees’ pay.  He said given existing pay structures that could set the income of some new state hires too close to the level of pay of long-term employees.

      “Creating an arbitrary baseline prevents us from being able to be responsive to the market, as well as sends an unintended message that would be somewhat negative to those … who have been working for two decades,” said Richey.  “You can work for 20 years in your job, have tremendous institutional memory and ability, but you’re really no different than a part-time custodial worker at 17 years of age with no experience.”     

      “I wanna get away from the $15 an hour because to me that’s just a number.  That’s not what it’s going to take to get people in.  I’m an employer … in unskilled jobs and I can’t get people for $17 an hour, so that $15 an hour is just a number we’re throwing out there and I believe that is for political reasons,” said Representative Richard West (R-Wentzville).  “Let’s do realistic and what’s it going to take to hire?  For one department it may require 15, for another department it may require 18, for another department it may require 22.”

The Missouri House Budget Committee takes testimony from Missouri Budget Director Dan Haug (Photo: Mike Lear, Missouri House Communications)

      Many legislative budget makers resist using federal funds to support ongoing expenses, like state employee pay.  They refer to it as, “one time money.”  Haug said this proposed pay hike relies only on state funds.

      “Missouri’s revenues are doing very well.  Right now the state’s economy is doing well.  We have more people coming back to work.  Our revenues are coming in very strongly.  They came in very strongly last fiscal year.  The consensus revenue estimate shows strong growth through fiscal year 23,” said Haug.  “Even at a very conservative growth rate of 1.5-percent growth in general revenue we can easily afford this ongoing pay increase.”

      Haug, who has worked with the state’s budget for more than 25 years, said, “I feel very confident that we can afford what we’re doing now and what we’re going to need to do in the future.”

      Other legislators asked whether studies should be done to make sure the state needs the employees it has, or that pay increases would be going to the employees who are most needed or deserving.  Haug said the state has reduced its workforce significantly in the past ten years, and said such an employee pay review could take months, and changes to the labor market necessitate a quick response.  He said state employee turnover in some positions and pay levels has been as high as 55-percent. 

      The committee has not voted on the bill which includes the proposed pay plan, House Bill 3014. 

House budget plan would restore FY ’18 funding levels to colleges, universities

The Missouri House has perfected a budget proposal for the next fiscal year including an agreement to hold down college tuition, while restoring $68-million that Governor Eric Greitens (R) proposed cutting from colleges and universities.

House Budget Committee Chairman Scott Fitzpatrick (photo; Tim Bommel, Missouri House Communications – click for larger version)

The House is proposing putting that money back into the core funding for those institutions, putting them back at the level of state support they are receiving in the current fiscal year.  In exchange, the state’s institutions will increase tuition by no more than one-percent in the fiscal year that begins July 1.

House Budget Committee Chairman Scott Fitzpatrick (R-Shell Knob) proposed an amendment that completed the restoration of that $68-million dollars.

“I think that this is the appropriate thing to do,” said Fitzpatrick.  “I think a one-percent tuition increase is manageable for the folks in this state.”

Under the agreement between Fitzpatrick and the institutions, the schools must receive the money the House has proposed appropriating.  If the appropriations are withheld by the governor or otherwise do not reach them, they can increase tuition based on the Consumer Price Index.

The agreement is supported by Democrats, including the top Democrat on the budget committee, Kip Kendrick (D-Columbia), whose district includes the University of Missouri’s flagship campus.

“I appreciate this and the whole conversation we’ve had in budget committee and working with the chair on reaching an agreement.  I think everyone in here has the intent of … wants to hold tuition increases to a minimum to make sure college remains affordable and accessible for all,” said Kendrick.  “Higher education institutions have taken it on the head in the last few years with some major budget cuts, so glad that we can do all that we can this year.”

Representative Kip Kendrick, the top Democrat on the Missouri House Budget Committee (photo; Tim Bommel, Missouri House Communications – click for larger version)

Until the agreement was reached, Fitzpatrick had proposed putting $30-million of the money that is now going to core funding into the Access Missouri scholarship program, which would have fully funded it.  Kendrick is glad to see that money going back to the core, but he hopes Access Missouri receives additional funding in future years.

“I love Access Missouri.  It is a fantastic, needs-based scholarship program in the State of Missouri.  It is our only needs-based aid program in the state and for a brief moment of time it had 30-million new dollars in it, and I hope that we can do what we can in the future also to make sure that we appropriately fund that line as well,” said Kendrick.

Budget committee member Crystal Quade (D-Springfield) agreed.

“While I wish that we could be funding Access Missouri and I hope that we try to do so in the future, representing Missouri State, one of the institutions who is a big part of this agreement, I was thankful for the budget chair to have the discussion and have everybody at the table and come up with this solution,” said Quade.

The tuition agreement does not extend to Missouri Southern in Joplin.  Fitzpatrick said their financial situation is dire enough that he agreed to let them opt out of the one-percent tuition cap requirement.

The funding for higher education is found in House Bill 2003, which itself appropriates more than $1.17-billion.  The House is expected to vote on that and the rest of the budget bills on Thursday.

If passed, they will go to the Senate, which will spend the coming weeks developing its own budget proposal based on the House’s plan.  The two chambers will then attempt to compromise on a final spending plan to send to the governor in May.

State Representative’s review finds $36-million of potential savings in Department of Revenue

A state House representative says his review of the Department of Revenue uncovered ways the state could save up to $36-million dollars.

Representative David Gregory (photo; Tim Bommel, Missouri House Communications)

St. Louis Republican David Gregory presented to the House Budget Committee what he called a, “Fiscal Opportunity Audit” of the Department.  He explained that he spent 160 hours over several months studying the department, meeting with its staff, and comparing it to counterparts in other states.  He said he found a number of ways the state could save money or generate revenue.

At least one of his findings has come up in other reviews of Missouri tax policy including Governor Eric Greitens’ (R) tax cut plan, and that concerns the state’s business sales tax discount.  Missouri businesses that remit to the state in a timely manner the sales tax they collect get a 2-percent discount.  Gregory said of neighboring states three have no such discount and four cap how much money businesses can retain.  Missouri’s discount is the second highest among all states.

“Let’s say we wanted to implement an arbitrary cap.  We still wanted to be the most business-friendly, we wanted to be the most generous in our area, we can implement a cap of $3000 a month.  That would save $52.7-million a year in state taxes,” said Gregory.

Gregory said he also found that capping the state’s withholding tax discount – a discount that among the states is unique to Missouri – the state could save up to $13-million a year.

As for revenue generation, Gregory said for the Department to hire three more people to investigate notices of auto sales could generate more than $3-million a year.  Hiring two more people to investigate the paying of sales taxes on vehicle purchases might result in $700,000 a year more revenue.

Gregory also looked at what the Department is spending on supplies and that led him to Missouri Vocational Enterprises.  People incarcerated in state prisons work for MVE making products including furniture, clothing, notepads, and a variety of other products.  All state agencies are required by law to purchase any product they need from MVE if it’s made there.

Gregory said when he looked into one specific product, a chair purchased from MVE by the Department, he found that, “the exact same chairs sell online at Office Depot for $150.  Our Department of Revenue paid almost $400 a chair.  That’s too much.  That’s way too much,” said Gregory.  “I like the MVE.  I love the program.  I think it’s a great idea and we’re going to work with them, but paying $400 – requiring a $400 spend on chairs is absolutely ridiculous.”

Overall Gregory said the Department spent $4.2-million a year with MVE.

“If we could get the MVE to commercial rates of one-third of what it is … even if we could just do a 50-percent cut … that’s $2.1-million a year in savings,” said Gregory, who said he’s been talking to MVE’s director and believes changes to that agency’s pricing can be implemented.

In looking at size, Gregory found that Indiana’s Department of Revenue covers about half-a-million more residents over about the same land size with 822 employees compared to 1,145 in Missouri’s Department.  Gregory said he has identified 283 employees he believes the Department could cut without falling behind in its operations.

Gregory emphasized to the committee that his findings were just that; not recommendations or proposals.  The budget subcommittee that deals with the Department will consider whether to explore them further or act upon them.

House Budget Committee Chairman Scott Fitzpatrick said the Department will be given time to react, “As opposed to us doing it through the budget right now and maybe forcing the changes to occur too fast.”

“What happens now is I want to see to it that we implement and execute on those observations if the budget committee and the General Assembly agrees with me,” said Gregory.  “A lot of them aren’t things you can just do overnight, so generally like I said in my presentation, my recommendation’s going to be that we work with management over a course of 12, 18, 24 months and see what we can do together to execute.”

Gregory said any changes the Department does experience could take years and some could require legislation.  At some point he hopes to see a similar review done with other state agencies.