Nixon explains $2.3 billion in budget withholds

Missouri Gov. Jay Nixon hosts a press conference Wednesday, Dec. 7, 2016 at the state Capitol announcing $51 million in restrictions of budgeted spending, including nearly $43 million for Medicaid.
Missouri Gov. Jay Nixon hosts a press conference Wednesday, Dec. 7, 2016 at the state Capitol announcing $51 million in restrictions of budgeted spending, including nearly $43 million for Medicaid.

Gov. Jay Nixon said last week his nearly $2.3 billion in budget withholds - blocking the lawmaker-approved spending for a variety of state departments, agencies and programs - have helped leave Missouri in a better financial condition than when he took office in January 2009.

The biggest hit from those withholds, since the 2014-15 state business year, involved capital improvements projects throughout state government and its public colleges and universities.

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NWA Media/MICHAEL WOODS --08/31/2013-- University of Arkansas kicker Zach Hocker watches his kick in the 1st quarter of Saturdays game against Louisiana at Razorback Stadium in Fayetteville.

During that same period, Nixon blocked the most spending of the state's executive departments from the budgets approved for Social Services programs, with the Elementary and Secondary Education department coming in second - with roughly one-third of the Social Services cuts.

Nixon told reporters last week he's withheld more than $2 billion during his nearly eight years in the governor's office.

"When I took office (in 2009), there were no restrictions in place, despite being in the depths of the worst recession in our lifetimes," Nixon said at a news conference where he announced another $51 million in spending restrictions. "My first year in office, I had to restrict $743 million in spending, just to keep the budget in balance."

Nixon's withholdings often have been controversial, especially with lawmakers who think he's played politics in blocking what they said were good financial decisions.

Historically, that's one of the tensions between the executive and legislative branches built into the democratic republic form of government.

The tension appears greater when the executive and Legislature are controlled by different parties, as has been the case throughout Nixon's two terms in office - because the different political philosophies have different priorities.

Throughout his administration, Nixon has said: "Budgets are about priorities."

And, Nixon said from his standpoint, the budget decisions are financial, not political.

Supporters of a 2014 change to Missouri's Constitution, allowing lawmakers to force the governor to release money he's withheld from spending, argued in their advertising they needed to send Nixon a message they were tired of his using budget withholdings as political tools.

Days after that vote adopting the change, now-retiring Senate Appropriations Chairman Kurt Schaefer, R-Columbia, said the new language would order the governor to release some of the money in the Legislature-passed budget he had withheld from spending.

"The governor's still withholding about $700 million, including from some (of our) priority projects," Schaefer said in November 2014.

Lawmakers over the years - not just during Nixon's administration - often have argued they've passed a "balanced" budget instead of the unbalanced one the governor recommended.

Until voters approved the 2014 constitutional change, the governor's power included submitting a spending proposal along with recommendations for increasing revenues to pay for those recommendations - a method often objected by lawmakers who didn't want to raise taxes.

The Missouri Constitution requires the state's budget to be balanced at the end of the day on June 30 - the last day of the state's business year.

The Constitution also has language providing the governor with ways to adjust spending so budgets don't get out of balance through the course of the 12-month business year; although Nixon's critics argue Nixon has misused those powers and hasn't followed the Constitution's specific directions.

Then-state Auditor Tom Schweich even took the governor to court over his 2013 withholdings, but the state Supreme Court said the lawsuit was filed too early for them to decide the issue.

This year, the state Public Defender system sued over the governor's decision to withhold $3.5 million of the $4.5 million in new funding lawmakers gave it - and Cole County Circuit Judge Jon Beetem rejected that challenge, citing the high court's decision in the Schweich case.

The system filed its notice last Thursday, asking the appeals court in Kansas City to review and overturn Beetem's decision.

Nixon reminded reporters last week: "Missouri governors have a constitutional responsibility to balance the budget.

"This authority to make the decisions, to control the rate of spending, ensures Missourians that Missouri (government) doesn't spend money we don't have.

"And it's been cited by the ratings agencies time and time again."

Throughout his administration, Nixon also has pointed constantly to the state's AAA bond rating from all three companies that rate bond issues throughout the country.

It's the top-level rating, and Missouri has had it since Warren Hearnes was governor in the late 1960s and early '70s.

"Since I've been governor, 11 other states have been downgraded," Nixon reminded reporters last week, "(but) we have maintained that spotless, gold-standard AAA credit rating throughout the entirety of my service."

The governor regularly says lawmakers made the wrong budget decisions when he has announced a withholding.

As an example, he said last week: "You may recall that in July, after the Legislature tried to begin dozens of new government programs and (had) millions of dollars in excess spending, I restricted $115 million in spending that we simply couldn't afford.

"Then in September, when the Legislature returned and passed even more special-interest tax breaks that were not accounted for or paid for in the budget, I restricted another $45 million - bringing the total amount of spending under restriction to $160 million."

He pointed to previous years, where he announced budget withholdings when lawmakers passed tax cuts.

However, Nixon said he also has restored some spending authority when his vetoes were sustained, or whenever the state's revenue picture appears to be getting better.

"When the opportunity has presented itself - like it did in October with the Volkswagen settlement funds - I've also released" withheld money, he said.

"This careful action has kept our budget in balance and our AAA credit rating intact," Nixon said.

Although Nixon's withholdings over the years have included budget items funded from federal funds or from other sources, the governor has the most control over money that comes through "general revenue," including income and sales tax receipts.

The Office of Administration has kept some details of Nixon's budget withholdings only since the 2011-12 business year, with more complete information since the 2014-15 business year.

So, although the governor talked about blocking the spending of more than $2.2 billion since he took office in January 2009, our calculations looked only at the withholds since July 2014.

These numbers don't include money that was withheld but, later, released for spending.