MOScout Daily Update: Moody on the Budget Mess Ahead - MOBudget Offers Policies - Readers on Onder for LG and more...

Moody on The Budget Mess

Lobbyist, and former budget director, Jim Moody has a new note with clients that he’s allowing to be shared.  Find the Moody Report here…

From Moody’s note…

·         While the State originally projected to end Fiscal Year 2020 (the current fiscal year) with a cash and anticipated lapse of over $500 million, that beginning balance was budgeted by Governor Parson in the Fiscal Year 2021 budget. Budgeting the cash balance and the lapse is a pretty standard budgeting technique, and we are not being critical of that action. But that cash that was anticipated will likely not even be in the bank on June 30, 2020… Therefore, available cash to operate Missouri government is going to be tight…

·         Our current view is that any ending cash balance on June 30, 2020, will be small, and that there may be spending restrictions applied in FY 2020 in order to create some operating cash…

·         There is plenty of time for the General Assembly to pass the FY 2021 operating budget bills, which are poised to be debated in the Missouri House. FY 2021 will not begin until July 1,2020, and in the normal course of state business the Governor does not sign the appropriations bills until the latter part of June. We are confident that the General Assembly and the Governor will find a way to get the FY 2021 budget in place in a timely manner…

·         [T]he Budget Reserve Fund is a very good idea for Missouri state government, but the Fund offers limited flexibility to address unusual circumstances such as the current COVID- 19 crisis… the use of the Fund to address COVID-19 in May and June 2020 will likely be very limited…

·         [T]he increased [Federal Medical Assistance Percentage (FMAP)] match would provide an estimated $690 million in federal funds for Medicaid in calendar 2020, which would then decrease the State match by a similar amount… Our first take from a week ago was that for a recession similar to 2001-2002, the $690 million would go a long way to bridging the revenue shortfall created by the recession. We now think that initial analysis was wrong. We think the economic downturn in Missouri will far outpace this level of federal assistance…

·         It is too early to make a reasonable estimate of how large the revenue shortfalls will be and how long they will last. But the 2009-2009 recession seems like a reasonable place to start when examining this issue… The combined shortfall for the two fiscal years of the Great Recession was $1.230 billion cumulatively for FY 2010 receipts below FY 2008 receipts. We think that Missouri policymakers will have to plan for this level of revenue reduction, or possibly worse….

·         Missouri generally does not provide direct financial assistance to City and County governments. Rather, the Missouri Constitution and state statutes allow local governments to levy property taxes and sales taxes to provide for local governmental services. Sales taxes are likely to plummet for local governments due to the cessation of many business activities… We also believe that the Missouri State government will not be in a position to provide any relief for local governments…

·         As noted above in the discussion of local property taxes, we believe that K-12 funding will be susceptible to businesses that must, at least temporarily, close, and who also may think that their property tax assessment levels are too high…

Onder Backlash

Lots of feedback about the idea that Sen. Bob Onder is mulling an LG bid.  One state rep called the idea “dumb,” and one political operative said it was “goofy.”  Here are the more detailed responses from readers…

·         Onder did some polling, as you know. But that was before the crisis hit us. He would be foolish to primary Kehoe during a pandemic. It will be very hard to raise money, and it looks bad on him to criticize the incumbent under the current circumstances.  Also, the St. Louis biz community really likes Kehoe, will be tough to raise money against him. David Steward has already given to American Dream PAC. The American Dream PAC, which has some heavy hitters on its board, had almost $600k as of last report. They are a well-organized machine. They have been on the ground canvassing for Kehoe since late last year. Further, the majority of Republicans do not want to see divisiveness at this time. Onder will lose, and will burn bridges as he does it… Could really hurt his future aspirations both with donors and the base.

·         In 2019, Kehoe out-raised Schmitt by more than $95,000 while spending $27,000 less. No one should underestimate Kehoe’s fundraising prowess. He has relationships around the state thanks to his work raising millions for the Missouri Senate Campaign Committee. Those relationships include almost all the top donors in the state who have invested in Kehoe. In a year, his war chest has grown from $42,000 to more than $369,000—and he’s banked more than half a million for his PAC. That’s likely to grow significantly if he’s facing a completive race.

·         You need to step back and ask why does Onder want to primary Kehoe. If it was just about vulnerability, I could make a case that Fitzpatrick has less name ID, less fundraising potential, and is more vulnerable. Incumbents don’t get primaried just because they are vulnerable. Schmitt, Ashcroft, and Kehoe are all maneuvering for the 2024 nomination for governor. If one of them can take out Kehoe now, their path gets clearer.

MOBudget on Policies for Corona

The Missouri Budget Project published a report with policy prescriptions for these crisis times.  Find it here.

Among the recommendations…

·         Add “E”s into the State Budget to ensure the flexibility to utilize additional federal funding: Traditionally, Missouri budget drafters would include “E”s on the spending lines to allow state departments to utilize additional and unexpected federal funds that are allocated to the state outside of the normal budgeting season.

·         Improve the Budget Reserve Fund: Missouri’s Budget Reserve Fund, established under IV Section 27(a) of the Missouri Constitution, is much more limited than other states… State lawmakers should quickly approve a joint resolution that would be put before voters on the August 2020 ballot to make the Budget Reserve Fund more accessible.

·         The Missouri Department of Social Services and the MO HealthNet Division announced several changes [to MO HealthNet] on March 19th. However, these changes currently will be enacted only for a 90-day period. Given the severity of the pandemic, and the likely economic consequences, the following changes should be enacted for the entire length of the pending recession resulting from COVID-19.

·         Increase SNAP benefits for households with children whose schools have closed for 5 consecutive school days or more. [And] increase SNAP benefits for all households temporarily to allow families to prepare with emergency reserves of food.

·         Seek waiver approval to expand the child care subsidy to serve essential workers who exceed income requirements through the emergency.

·         Urgently increase reimbursement rates for foster care for those who offer to care for children during the health emergency, with higher rates for those who care for children that have been exposed to COVID-19.

·         Suspend Senate Bill 509 Tax Cuts: The implementation is tied to a “trigger” that requires state general revenue to grow by more than $150 million compared to the general revenue in any of the three previous fiscal years for the next step in the tax reductions to take effect. Under the projected economic decline, state general revenue is likely to drop steeply. When the economy and state revenue begin to recover, it’s likely that revenue growth will trigger the next step in the SB 509 tax cuts.

MedEx Says It’s Good on Signatures

The campaign team pursuing Medicaid expansion for Missouri says that they “surpassed their signature goal… Presidential primary day put us over the top, thank goodness we started early!”

I’m curious if the coronavirus will add some pop to their polling numbers as healthcare becomes a daily issue for Missourians.

We’ll see…

New Candidate Filings

Robert J. Crump filed to run in House 82 as a Republican.  He’ll face Democratic Rep. Donna Baringer.

Dewanna (Dee) Marquez filed to run in House 129 as a Democrat.  She’ll face Republican Rep. Jeff Knight.

Tricia Derges filed to run for House 140 as a Republican.  That creates a three-way primary (no Democrat).  Rep. Lynn Morris is term limited.

Lobbyist Registrations

Franc Flotron, John Gaskin, David McCrackin, Richard McIntosh, and Bill Stouffer added 81 Logistics Group.

Birthdays

Happy birthday to Ed Smith.