West County Democrats

If you play solitaire with a deck of cards – and don’t make mistakes – you win some of the hands.  Of course, succumbing to temptation to lift the stacks looking for that elusive ace or deuce increases the odds of winning. Yes, it is cheating.

In the first months of every year the Missouri Legislature deals out the deck.  In a flurry of forecasts and guesses the House, followed by the Senate, tries to find a winning combination – a balanced budget – among the cards.

Some years the lege wins easily.  A growing economy makes all the cards fall into place, with aces easy to find.

Most years, alas, Missouri cheats.

At the beginning of the century, for example, tobacco companies began giving Missouri and the other states huge amounts of money to offset the damage caused by cigarettes, including health care costs.  In 2015, for example, Missouri received $132,000,000.00.  [ https://www.kff.org/health-costs/state-indicator/tobacco-settlement-payments/?currentTimeframe=0&selectedRows=%7B%22states%22:%7B%22missouri%22:%7B%7D%7D%7D&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D ]   Unfortunately, Missouri doesn’t spend most of that money to offset the impacts of tobacco.  As was recently reported, in the past year Missouri spent just $48,500 – about 8¢ per citizen – on efforts to prevent smoking. [ http://stlouis.cbslocal.com/2017/12/13/missouri-ranks-low-for-smoking-prevention/ ]  The tobacco settlement money, like every other baskets of money sent Missouri’s way, gets used to fill holes in the budget.  Dollars meant to reduce smoking increase the legislators’ per diem allowance or buy new SUVs for the governor.

Well, next year the game gets harder.

You see, in Missouri’s Fiscal Year 2019 budget…

► Revenue cuts by tax rate reductions; and, credits and exemptions enacted by the legislature will slash state revenue hundreds of millions of dollars below the meager FY2018 ration, and,

► Just enacted changes in the federal tax code will steal an additional $500 million or, probably more, from the state’s projected revenue.

Now, Missouri gets money from a variety of sources.  General Revenue comes from state income and sales tax, what little in corporate taxes Missouri still collects, and, nickels and dimes from a hodgepodge of little charges.  Income tax yield only trickles upward as employers have learned they don’t have to give raises anymore.  Sales tax results have suffered as many Missourians shop on-line – and Missouri doesn’t collect sales taxes on most on-line sales.

And, since General Revenue hadn’t suffered enough, a few years back the legislature (overriding Governor Jay Nixon’s veto) cut tax rates across the board and gave special tax gifts to lawyers and other “job creators.”  For example, buy a tractor trailer in Missouri and you don’t pay sales tax – just fill-out MoDOR Form 5435 [ http://dor.mo.gov/forms/5435.pdf ].

You get the idea.

Add the state-level cuts and the federal cuts and, well, Missouri must slash better than one billion dollars – out of nine billion dollars – from General Revenue expenditures.  Since the two biggest expenses paid with GR are schools and Medicaid, guess where the cuts must target?

Don’t worry, things will soon get worse.

“House Speaker Paul D. Ryan (R-Wis.) said Wednesday that congressional Republicans will aim next year to reduce spending on both federal health care and anti-poverty programs, citing the need to reduce America’s deficit.”  [ https://www.washingtonpost.com/news/wonk/wp/2017/12/01/gop-eyes-post-tax-cut-changes-to-welfare-medicare-and-social-security/?utm_term=.2686fd161119 ]

Now, Missouri gets about 60% of its $9 billion a year Medicaid [MO HealthNet] cost covered by Washington.  A modest 10% reduction, then, means Missouri receives $540 million less.  So, already inadequate General Revenue will have to cover much of that shortfall.  Add the federal reduction to Missouri’s shortfall and Medicaid spending may get slashed by $1 billion dollars for the year.  Ouch.

Faced with a massive disaster in funding, what does the Missouri Legislature plan to do?  Tell the governor to start playing solitaire.

A state senator said as much at a semi-public event last month, suggesting ‘we’ll let the governor make the cuts.’  Majority party state representatives have made similar murmurs, citing “too many unknowns” for them to make an adequate budget guess.  And, per that pesky Missouri Constitution, it is the governor with the ultimate responsibility to balance the budget.

Let’s hope Governor SEAL plays well.

Submitted by Glenn Koenen, WCD Member