Largest budget in Missouri history includes teacher raises, tax credits, rural road work
The budget includes raising the minimum pay for teachers, fully funding the state’s Medicaid program, including its expansion population, and income tax credits, as well as close to $3 billion in federal funding for projects across the state.
The Missouri legislature approved a $49 billion budget Friday — the largest in state history — that uses a treasury flush with cash to fund raises for teachers, income tax relief, rural road work and a variety of improvement projects across the state.
The House and Senate voted to advance a total of 17 budget bills to Gov. Mike Parson’s desk, with one bill serving as a second supplemental budget for the fiscal year that ends in roughly two months. The deadline to complete the budget was 6 p.m. Friday. Parson has until July 1 to sign the budget bills into law or veto them. The budget passed last year was $35 billion.
“We did have a great opportunity to do a lot of good with the budget, we have some resources this year that allow us to do some transformative things around the state,” said Senate Appropriations Chair Dan Hegeman, R-Cosby.
Money toward increasing both starting and existing teacher pay, Medicaid expansion, school transportation, rural roads and the state retirement system all made it into the final draft after a conference committee on Wednesday spent hours reaching compromises.
The increased investment on many fronts is due to a record surplus from increased revenue as well as over $2.8 billion in federal coronavirus relief funding from the American Rescue Plan Act.
“This is by far the best budget this state has seen maybe ever, but certainly in my time being aware of it,” Rep. Peter Merideth, D-St. Louis, said.
Not everyone was happy with the increased spending.
“Just remember as we're going through and those dollars are being used on ongoing expenses, that those won't be here next year, and we'll have to make some tough decisions next year and the year beyond,” Sen. Denny Hoskins, R-Warrensburg, said.
The bill funding K-12 education totals over $10.3 billion by itself.
One of the items initially proposed by Parson, cut by the House but eventually restored, was over $21 million to raise the minimum yearly wage for new public school teachers to $38,000. Currently the minimum is $25,000, which is one of the lowest starting salaries in the country.
The plan is set up to be a 70/30 split of state and local funds to increase those salaries.
The state also allocated over $37 million toward Career Ladder, which is an optional program that provides teachers with at least five years of experience within the state the opportunity to earn more money if they take on extra work like professional development opportunities.
Additionally, the bill invests more than $214 million in school transportation. The state is fully funding its portion of the transportation formula for the first time in years.
On the workforce development side, the state is giving money to multiple programs, including $5 million toward a high school-level geospatial training program for St. Louis that is associated with the National Geospatial Intelligence Agency in the city.
One-time income tax credit
In the middle of the budget debate Friday, the Missouri House voted 104-30 to pass a bill to give certain Missouri income taxpayers a one-time credit. The legislation will now go to Parson.
The bill uses $500 million in state general revenue to reimburse residents for what they paid in income taxes, up to a $500 limit for those filing returns by themselves and $1,000 for couples filing jointly.
The credits would only go to Missourians who paid income taxes for this past tax year. Additionally, because the funding allocated for the credits is a finite amount, there isn't a guarantee that a taxpayer would receive the full amount that they paid.
House Budget Chair Cody Smith, R-Carthage, said he would have preferred his version of the bill, which allocated $1 billion in state funding for the credits, but said he would not “let perfect be the enemy of the good.”
“This is giving money back to taxpayers when we're in a situation where the state government has too much of it,” Smith said.
The credit contains a salary cap, meaning if a single person makes more than $150,000 annually or a couple more than $300,000, they would not qualify.
That cap was introduced by Senate Minority Leader John Rizzo, D-Independence, who also spoke in favor of the tax credit on Friday.
“If we can give them a little extra money to make ends meet or help them buy groceries or whatever it may be, I think it's a good [way to] spend the money,” Rizzo said.
House Democrats did not share the same enthusiasm for the credit, with many saying this relief should be going to Missourians who need it the most, as opposed to people who are making up to $150,000 annually.
Rep. Barbara Phifer, D-Kirkwood, said that it was a missed opportunity to give back to the people who need it and that just because someone doesn’t pay income taxes, it doesn’t mean they aren’t contributing to the state in other ways, like paying sales taxes.
“What we are doing is really discriminating against young families here in Missouri today. And I feel really sad about that. We could have done this differently,” Phifer said.
Transportation and pensions boosted
A variety of areas saw increased spending credited to record revenue.
In transportation, the legislature allotted enough money to restore Amtrak service to two trains a day between St. Louis and Kansas City instead of the current one.
Additionally, lawmakers added $7 million for public transportation systems across the state, bringing that total to over $8.7 million.
They also approved $100 million to go toward maintenance and repair of Missouri’s rural roads.
“It's great to have that in there to take care of the needs of the rural roads that continue to degrade, and hopefully we'll be able to move forward and give a little more attention to the low-volume roads out there,” Hegeman said.
The legislature also approved Parson’s request to add $500 million to Missouri’s pension plan for state employees, known as MOSERS.
This year’s budget also fully funds Medicaid, including its expansion.
While an attempt to give the legislature the power to annually appropriate funds to the expansion population, including the possibility of not funding it at all, has passed the House, the funding is in the budget.
One part of the bills funding the Department of Health and Senior Services and the Department of Social Services that did receive criticism was language that prohibited state funding from going to facilities other than a hospital that perform abortions, or an affiliate of those facilities.
Sen. Jill Schupp, D-Creve Coeur, said the language is designed to defund Planned Parenthood and called the attempt to legislate through the budget process unacceptable.
“What we are going to do is put 45,000 Missourians in jeopardy of not getting the screenings they need when they need them, because they're going to be busy trying to find a place that can take them in and provide those services to them,” Schupp said.
Nearly $3 billion in federal spending
In addition to the bills funding the operating budget, the legislature had billions of federal dollars to allocate for projects and programs across the state.
The bill contains more than $2.8 billion in federal money, most coming from the American Rescue Plan Act. It includes statewide projects such as broadband development as well as improvement projects for colleges.
The projects include over $104 million for the construction of a new crime lab in the Department of Public Safety, as well as more than $1 million to the department for sexual assault kit testing.
Counties and cities also are in for federal dollars, with funding for over 10 projects in the St. Louis area alone, including $15 million toward the removal of condemned city-owned, vacant properties, as well as $40 million to the University of Missouri-St. Louis for its Campus of the Future project, which includes the construction of buildings.
The bill received criticism from some House members on Friday who said they did not get the chance to vet the bill and negotiate. The Senate passed it the night before, and the House did not take a conferencing motion.
The state has until the end of 2024 to allocate funding from the American Rescue Plan Act. Some House members wanted to use more of that time.
“This is our opportunity to step up and say, ‘No, call us back into a special session.’ Let’s do it the right way. Let’s make sure that everybody’s voice is heard,” said Rep. Rasheen Aldridge, D-St. Louis.
“It’s the product of a long series of compromises, and I’m going to stand with our Budget chairman. I believe we got a very good deal for the House, and I think we should vote yes,” said Rep. Phil Christofanelli, R-St. Peters.
Ultimately, the bill passed 114-16.
Follow Sarah Kellogg on Twitter: @sarahkkellogg
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