A Missouri Senate decision to use money set aside for Capitol renovations to shore up funding for public schools isn’t popular with Gov. Mike Kehoe or the budget chief in the Missouri House. But they aren’t dismissing it outright.
Speaking to reporters at a news conference in his office, Kehoe said lawmakers who set $600 million of surplus general revenue aside in 2022 and 2023 had done a service to the state to preserve and restore the statehouse. The money has been largely unspent as a plan is developed.
Kehoe said he’s reluctant to use money in the Missouri State Capitol Commission fund for two reasons.
“It’s a little bit about trying to make sure we restore the Capitol for future generations,” Kehoe said. ”It’s also about using one time money to fix an ongoing problem. Sometimes it’s not the best way to work with it.”
In an interview with The Independent, state Rep. Dirk Deaton, a Seneca Republican who is chairman of the House Budget Committee, said he is also reluctant to go along with the Senate decision.
State Sen. Rusty Black, a Chillicothe Republican who chairs the Senate Appropriations Committee, used $118 million from the fund for the foundation formula, another $15 million for school transportation needs and about $225 million from the fund overall in the $48.8 billion operating budget approved Wednesday in the state Senate.
Democrats asked Deaton to use money from the fund during House consideration of the budget and he declined.
“I felt it probably was not appropriate to go there this year, and I still feel this way,” Deaton said.
The issue the Senate budget plan is trying to solve is a shortfall in revenue from the lottery, casino taxes and cigarette taxes, all of which are earmarked for education. Revenue from the lottery and casinos is showing growth this year but not enough to cover all the spending from those funds included in the budget.
As a result, the Department of Elementary and Secondary Education has told school districts that it will not be able to deliver full allocations from the foundation formula. Instead, districts have been told to expect about $245 per student less than the budget as written would allow.
The foundation formula appropriation is $4.3 billion and the House and Senate have many differences over where that money is coming from. A conference committee with Black, Deaton and eight other lawmakers will decide which funds to use and how much from each.
The main source of money is the general revenue fund, with the Senate budget plan using $68 million more than the $2.5 billion spent in the House version. The Senate did not use surplus money in the Blind Pension Fund, which constitutionally must be used for public schools, while the House took $64.7 million.
But the key difference is how much each budget expects from the lottery, casinos and cigarette taxes. The Senate budget uses $339 million from the lottery overall, including higher education programs, while the House version expects the lottery to provide about $415 million.
The Senate version is close to what the lottery produced in the last fiscal year. The House amount is similar to the revenue expectations of the past three years, which have all been more than the lottery produced.
The lottery has produced $400 million or more twice, and not since fiscal 2023. Deaton said he’s confident in the expectations for the coming year.
“Lottery has been fairly volatile the last few years, and it’s heavily dependent on large jackpots, which are hard to predict,” Deaton said. “We’ve done more historically.”
The ranking Democrat on the House Budget Committee, state Rep. Betsy Fogle of Springfield, said she’s ready to support Black’s use of Capitol commission funds. She’s not as confident in lottery revenue as Deaton.
“I’m unwilling to gamble on the amount of dollars we’re spending on kids in classrooms across the state,” Fogle said at a news conference Thursday. “So I would agree with Sen. Black in finding a more stable funding source for our foundation formula.”
Spending from the commission fund for its intended purpose would begin in the coming fiscal year if a $104 million appropriation included in House-passed construction bills remains intact. Part of the money would be used to make the building more accessible to people with disabilities.
“I want to make sure that this building is a building that’s accessible for everybody,” Fogle said. “But I’m uncomfortable when we’re not fully investing in K-12 classrooms across the state of Missouri with moving a budget forward that leaves dollars for things like making this building look prettier, making the gardens look prettier, when we’re not fully funding our promise to kids.”
All three budget plans produced this year — Kehoe’s original proposal in January, the House version passed last month and the Senate plan approved Wednesday — have large deficits between expected revenue and expected spending from the general revenue fund.
As a result, the general revenue fund balance, which stood at $3 billion on March 31, is expected to be less than $300 million by the end of the coming fiscal year. The Senate’s decision to dip into the commission’s fund is one of several that are intended to replace general revenue with other money.
In addition to the commission’s fund, there are other funds in the state treasury where lawmakers have parked general revenue for specific purposes. There was $1.1 billion left on March 31 from an original $1.4 billion set aside for work on Interstate 70 and $208 million in a fund dedicated to work on Interstate 44.
Both funds could be returned to general revenue and the House-passed budget plan took $117.5 million from interest earned on those funds and would direct that it be deposited into general revenue.
There is also $352 million in the facilities maintenance reserve fund, which receives a mandatory new deposit each year and can be spent instead of general revenue on state building needs.
Kehoe did not say whether he opposes spending capitol commission funds on schools enough to veto the appropriation if it reaches his desk.
“There’s so many pieces of this budget I would rather wait until the entire thing is done and comes to my desk,” Kehoe said, “because what you don’t know is what other pieces that all that ends up affecting. And so I’d like to look at it as a holistic picture.”
