June 28, 2013
Additional spending by the General Assembly, costs associated with House Bill 253 make restrictions necessary to protect state's fiscal foundation, Gov. Nixon says
Gov. Nixon restricts $400 million from Fiscal Year 2014 budget, citing costs of House Bill 253
JEFFERSON CITY - Citing the additional spending appropriated by the legislature and the significant costs associated with House Bill 253, Gov. Jay Nixon today took action to keep Missouri's Fiscal Year 2014 Budget on solid fiscal ground by exercising his constitutional authority to restrict $400 million from the upcoming budget.
"House Bill 253 is a fiscally irresponsible, ill-conceived experiment that would undermine Missouri's strong fiscal foundation and weaken our economy now, and for years to come," Gov. Nixon said. "With a price tag of at least $800 million, House Bill 253 contains flawed provisions that would explode these costs immediately - to the tune of $1.2 billion -- if Washington passes the Federal Marketplace Fairness Act."
Earlier this month, Gov. Nixon vetoed House Bill 253 citing its $800 million annual price tag when fully phased in, and the potential for an immediate $1.2 billion revenue reduction if Congress passes the Federal Marketplace Fairness Act, which has already passed the U.S. Senate with 69 votes. Members of the General Assembly have stated their intent to attempt an override of the Governor's veto later this fall - after the budget has already gone into effect - thus creating the risk of budget shortfalls.
The budget passed by the General Assembly also created a number of completely new programs and increased funds for others, above and beyond the Governor's recommendation. All told, the legislature appropriated nearly $30 million in additional spending.
"As lawmakers begin to understand the problems with House Bill 253 and their immediate and continuing consequences, I am confident that they will agree this bill should not become law," Gov. Nixon said. "But no governor can responsibly manage a state budget on the assumption a veto will be sustained. That is why, given the additional spending appropriated by the legislature and the uncertainty created by House Bill 253, we must take action now to keep our state's fiscal house in order."
The Governor also cited the legislature's failure to pass comprehensive tax credit reform and to draw down the federal dollars available to expand and improve Medicaid in Missouri - both of which would have had a positive impact on Missouri's budget this year and in years to come.
Earlier this spring, global credit-rating agencies Fitch Ratings and Standard & Poor'sreaffirmed Missouri's AAA credit rating citing many factors, including the Governor's constitutional authority to restrict funding to maintain a balanced budget.
In issuing the AAA rating, Fitch Ratings cited the Governor's prudent financial management and his constitutional authority to withhold funds to maintain a balanced budget. Fitch wrote, "The state's financial flexibility and liquidity position remain healthy, supported by strong revenue performance this year and reserves that remained fully funded throughout the recession"; and that the rating "reflects a low debt burden, historically conservative financial operations, and a broad and diverse economy."
The report from Standard & Poor's noted the Governor's rescission authority to cure budget imbalances and also said, "We believe that the strength of the budget management and government framework has allowed the state to maintain reserve and liquidity levels that are consistent with a 'AAA' rating."
Missouri also has been rated AAA by Moody's, who said that "executive control over appropriated funds is central to (the) state's strong fiscal management" and also cited Missouri's "history of excellent financial performance and sound reserve levels, strong fiscal management controls, and the state's moderate debt burden."