Missouri Needs Better Stewards
Is Missouri’s budget trajectory unsustainable? Yes, but given the discussions in Jefferson City over the past few weeks, you’d think it wasn’t.
As my colleague Patrick Tuohey recently wrote, the rosy budgetary picture painted by Governor Parson during his final State of the State address was, at best, misleading. Missouri’s budget has nearly doubled over the past five years, and the governor’s more than $50 billion recommended spending plan for next year requires dipping into cash reserves to make ends meet.
In other words, it will be up to Missouri’s General Assembly to begin turning the tide on government spending, which will likely be easier said than done for several reasons.
First, the federal government is winding down its COVID-19 and infrastructure spending. This means that unless Missouri begins scaling back the services that have been propped up with federal cash, state taxpayers can expect to soon be on the hook for a higher level of government services than they were just a few short years ago. While the reduced federal funding will impact some parts of state government more than others, the Medicaid program is sure to need hundreds of millions of new state tax dollars.
Second, state tax revenues aren’t expected to grow at the rate they have in recent years. Fortunately, higher revenue collections over the past few years allowed Missouri to accumulate significant cash reserves, but some of those reserves have already been spent and the governor’s budget recommends spending more. There should be no expectation that Missouri’s tax revenue growth or remaining cash reserves will be able to fill the budgetary hole the federal government leaves behind, let alone cover the inflationary cost increases required to continue funding the state’s other spending priorities.
Given the harsh budgetary realities Missouri is facing, it’s especially troubling that Governor Parson and the general assembly are reportedly considering expanding the state government’s role even further. For example, Governor Parson is recommending funding—in a budget that relies on one-time cash reserves to maintain balance—childcare and teacher pay programs that will likely become new long-term spending obligations.
In a perfect world, Missouri taxpayers wouldn’t have to ask their elected officials to be good stewards of the state’s finances. Policymakers would prepare for rainy days and take future spending obligations into account when they craft the yearly budget, ensuring the state’s revenues and spending are on sustainable trajectories. Unfortunately, that doesn’t appear to be happening right now. For now, Missourians are going to be left hoping that something changes between now and the end of the legislative session.
