(2018 Operating Budget)
“What I’m not saying is that all government spending is bad. It’s not – far, far from it, but there is no free lunch, as a former colleague of mine used to say. There is no public tooth fairy. Father Christmas does not work on the Treasury staff this year. You can never bail someone out of trouble without putting someone else into trouble”. Economist, Arthur Laffer
The one Constitutional mandate for each legislative session is for legislators to pass an on-time and balanced budget. One question that should be asked about every budget is whether Missouri taxpayers can afford it. Shouldn’t taxpayers themselves be a high priority when deciding the application and extent of government spending? After all they will be obligated to pay whatever we appropriate. Should the constitution be considered? It is written to limit government’s reach; is there any better way to appraise government reach than how and where it spends tax dollars? A constituent comment comes to mind – he said to me: “the difference between Democrats and Republicans is who they give your money to.” I wish that did not seem so true.
The Senate perfected our version of the budget this week and will now conference with the House to resolve the differences with their budget recommendations. The biggest budgeting challenge we face every year is to find ways to best fund our public schools while maintaining control over the rapid growth in entitlement spending (essentially the redistribution of income). The ever-rising cost of Medicaid, for example, seems to demand every new tax dollar. Missouri’s constitution, however, prioritizes education. Except for paying our debt, tax dollars spent on education are given first priority and must be 25 percent of our general revenue. The proposed budget has education funding (HB2) at 34 percent and totals just under $6 billion. Combined with local tax dollars, Missourians will spend approximately $10,000 per K-12 student on average.
This year’s projected spending on entitlements, dominated by Medicaid, is just over 10.9 billion dollars including federal funds. That represents approximately 39 percent of the proposed budget. Clearly the two budget leviathans are entitlements and education, combining for around 73 percent of this year’s budget. The competition was never more vivid than when, during floor debate on education spending, an amendment narrowly passed that put an additional $45 million into education. Because that requires $45 million to be removed from one or more other budget items, the scrambling began. The senate and the house must now confer to determine what spending will be reduced.
Thank God for the Senate appropriation and House budget committee members and the committed and capable staffs who are willing to spend long hours finding savings, identifying efficiency improvements and calculating re-prioritized expenditures. Missouri’s newest budget currently stands at $27.8 billion, the largest in Missouri history and that is after paring back many of this year’s budget requests. Government spending is growing which means government is growing. Art Laffer’s observation in the above quote was validated by this year’s budget process: “…You [government] can never bail someone out of trouble without putting someone else into trouble.”
Thank you for reading this legislative report. You can contact my office at (573) 751-2108 if you have any questions. Thank you and we welcome your prayers for the proper application of state government.