Missouri governor calls for $100M rainy day fund

 Missouri Gov. Mike Parson delivers the State of the State address Wednesday, Jan. 15, 2020, in Jefferson City, Mo. (AP Photo/Jeff Roberson)
Missouri Gov. Mike Parson delivers the State of the State address Wednesday, Jan. 15, 2020, in Jefferson City, Mo. (AP Photo/Jeff Roberson) (KY3)
Published: Jan. 15, 2020 at 4:41 PM CST
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Missouri Gov. Mike Parson on Wednesday called on lawmakers to set aside $100 million in taxpayer dollars to use in case of financial emergencies.

The Republican governor proposed the new savings fund as he outlined plans for next year's state budget and his policy priorities during a State of the State Address before the Republican-led Legislature. State Budget Director Dan Haug told reporters that the savings fund could be bolstered if lawmakers this year pass legislation requiring online retailers to collect sales taxes on purchases made in Missouri.

In prepared remarks provided before his speech, Parson said he wants the fund "to give our state greater flexibility and stronger finances than ever before."

"Since the beginning of our administration, our state treasurer, budget director, and my chief of staff have been discussing this opportunity," Parson said. "I am proud that we can finally make this vision a reality."

Missouri elected officials have been sounding the alarm for potentially rocky state finances in the coming years.

Missouri's Democratic Auditor Nicole Galloway, who is running to unseat Parson this year, released an audit in October that warned that Missouri is not saving enough to avoid having to cut spending or raise taxes if there is a recession.

On top of that, the state could take a massive financial hit if a proposal to expand the number of people eligible for Medicaid, a government health care program, makes it on November's ballot and is approved by voters.

Parson on Wednesday denounced the measure as financially irresponsible.

"The reality is that expanding this system comes at the cost of other vital services such as education, workforce development, and improving our aging infrastructure," Parson said in prepared remarks. "So, make no mistake about it, the vague proposal they are not explaining or purposely withholding is a massive tax increase that Missourians cannot afford."

Also lurking is a possible $125 million verdict against the state following a Missouri prison guard lawsuit that alleged that they were shorted on pay. The lawsuit is pending.

Missouri already has what's called a Budget Reserve Fund. But a constitutional constitutional amendment adopted by voters in 2000 limits Missouri's reserve fund to 7.5% of net general revenue, or 10% if lawmakers approve a special appropriation for it, which they have not done.

Money borrowed from the fund for emergencies must be repaid within three years, making it challenging to use during revenue crises, such as a recession. The fund is also routinely tapped for cash flow purposes.

Under Parson's plan, the new rainy day fund could hold as much as 2.5% of the state's general revenues. Combined with the other reserve fund, that could bring state savings up to 10% of general revenues.

Galloway in her October audit recommended a similar rainy day fund to what Parson is now proposing. Haug told reporters that Parson's plan did not stem from her suggestion.

Galloway renewed criticism of Parson in a video she released Wednesday, blaming him for a drop in the number of children covered by state health care.

"He needs to fix the health care crisis he helped create and give children back their health care," Galloway said of Parson.

Between January 2018 and December 2019, roughly 100,000 children lost coverage from the state's Medicaid health insurance program.

Parson's budget proposes about $11.7 billion for Medicaid —a roughly 5% increase over the current budget, although the number of people covered by the government health care program for the poor has declined by greater than 6% over the past year

Medicaid Director Todd Richardson said the higher costs have been driven partly by "outdated payment methodologies" that the state is trying to fix, noting that medical providers have had no incentive to hold down billings for out-patient services and that some have been paid significantly more than others for the same services.

He attributed the decline in covered children partly to an improved economy but also to problems that occurred when switching to an automated eligibility determination system.

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