Politics

Capitol Perspectives: Budget Withholding

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The Missouri Supreme Court’s latest decision upholding Jay Nixon’s budget powers has handed future Missouri’s governors a powerful new tool to control state spending.

Even before the court’s decision, our state’s governor had significant controls over state spending plans passed by the legislature.

Unlike the U.S. president, Missouri’s governor can use his veto authority to reduce or completely eliminate one or more separate funding lines in the budget.

But as Gov. Joe Teasdale discovered in 1980, that line-item veto power is not absolute. Teasdale became the first Missouri governor to suffer a legislative override of his veto of funds for a new state office building.

That override is why you now see the Harry S Truman office building across the road from the state Capitol.

Missouri’s Constitution, however, gives the governor an even stronger tool to stop spending. It’s a tool that is not subject to legislative review.

After the appropriation bills are signed into law, the governor can withhold money if he determines that state revenues are falling below the original estimate upon which the budget was based.

There is no requirement that the withholding be distributed equitably among programs. The governor is completely free to pick which agencies get hit by withholdings and which are to be exempt.

In addition, there is no restriction on releasing withholdings if he later determines the state is collecting enough revenue to fund the budget. He can release withholdings whenever and to whatever program the governor chooses.

The extent of the governor’s budget powers over the legislature was demonstrated this year when lawmakers voted to override Nixon’s veto to fund rebuilding a technical education school’s facility.

It was the first veto overridden this year, with the House motion made by Rep. Chris Kelly, D-Columbia. But it was pyrrhic victory. The next morning, the governor’s office announced Nixon was withholding the funds for rebuilding the school’s facility.

There were no detailed arguments from the administration citing revenue tax collections that justified withholding those funds.

We now know there did not need to be any revenue shortfall justification. While that technical school’s withholding was not part of the case, the power of the governor to block funding without a revenue shortfall was one of the elements in the latest Supreme Court decision.

The court cited Missouri’s Constitution that lets the governor control the rate of spending, a power separate from his withholding authority to assure a balanced budget.

The state high court’s decision essentially empowers the governor to delay spending until the very last day of the fiscal year. Then, of course, it would be practically impossible for an agency to get the money obligated before the budget year ended.

There’s another fascinating comparison with that 1980 budget veto by Teasdale.

Nixon also has stopped state funding for a government new office building in Jefferson City. But unlike Teasdale, Nixon did not veto the idea. Instead, he just withheld the funds — protecting his decision from the threat of an override.

You would think that lawmakers would be eager to remove the ability of the governor to unilaterally undo legislative funding decisions. Lawmakers have criticized Nixon in the past for his withholdings from education and education. And the Supreme Court’s decision affirming those powers did raise concerns from House Speaker Tim Jones.

But over the decades, there’s been no serious legislative effort to restrict those withholding powers. Instead, I’ve heard legislators argue that giving the governor broad powers to keep the budget in balance helps protect the state’s fiscal health. It assures that there’s some sort of control to the political pressures on lawmakers to pass a bloated budget.

That actually happened in Teasdale’s last year as governor. The legislature passed a budget that lawmakers fully knew was out of balance. As soon as Teasdale left office, incoming Gov. Kit Bond promptly balanced the books with massive withholdings.

I think there also is a political factor. Knowing that the governor can balance an unbalanced budget without the danger of legislators having to vote on the cuts eases the pressure on the legislature to pass a balanced budget. No matter how uncertain the state’s future revenue collections, lawmakers know the governor can make things right by withholdings.

There’s also a non-political, policy advantage with the governor’s withholding powers. To restore a vetoed line item in the budget would require an act by the legislature — either an override or a new funding bill.

But when the governor withholds funds, that money can be released anytime the governor thinks the economy and revenue collections are on the upswing.

Nixon has held that out as a future possibility for funding some of statehouse building projects he’s withheld.

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