Updated at 6:30 p.m.
JEFFERSON CITY — With the effects of the coronavirus bearing down on state revenues, leaders in the Missouri House scrapped plans to approve the state budget Wednesday.
In a Tuesday evening memo to members of the 163-member chamber, House Majority Floor Leader Rob Vescovo, R-Arnold, cited the uncertainty brought on by the outbreak for the delay.
“This decision was made based on the information we currently have, as well as other factors that cannot be foreseen at this time,” Vescovo said.
He said the postponement would allow for budget writers to “account for potential fluctuation in revenue and address any new needs facing Missouri.”
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With the Senate already out of the Capitol in an extended spring break, the House had planned to start voting on the budget for the fiscal year beginning July 1.
But, as the economy roils with closures linked to the outbreak, it became increasingly clear that much of the tax revenue budget-writers had projected to flow into the state’s general checkbook may vanish.
That could have meant the Senate, when it begins its work on the budget, takes out big chunks of spending approved by the House to adjust for a slowing economy. Or, further down the road, it could force Republican Gov. Mike Parson to cut programs in order to keep the spending plan balanced.
When asked whether he thought revenue would take a hit, and how he planned to address it, Parson said the state was “fortunate enough” to set aside $100 million this fiscal year for emergency scenarios.
“Is it going to affect the state? Yes,” Parson said in Columbia on Tuesday. “Is it going to affect the economy? I think we all know that.”
“There’s no doubt there is going to be a huge economic hit,” said Rep. Robert Ross, R-Yukon, who has been a member of the House Budget Committee for eight years.
“Obviously we’re in very uncertain times,” added Rep. Kip Kendrick, a Columbia Democrat who also sits on the House Budget Committee.
Both chambers are operating under a May 8 deadline to get a spending plan to Parson.
Amy Blouin, director of the Missouri Budget Project, which monitors state spending, said in the past two downturns — in 2001 and 2008 — state government saw revenue decrease by at least $800 million.
She believes Missouri will see a similar drop this time.
Missouri’s budget is financed by people paying income and sales taxes and businesses paying corporate taxes. As businesses close or curtail their hours to ward off the spread of COVID-19, they pay less money in taxes to the state.
Individuals also spend less, driving down sales tax revenue.
The state also counts on revenue it gets from gambling. On Tuesday, Parson ordered the closure of the state’s 13 casinos, potentially sucking $12 million in expected revenue out of the state’s coffers at the same time officials are ramping up spending on fighting the disease.
At the beginning of the budgeting process, Parson based his $30.9 billion spending proposal on a growth in tax revenue of 1.9% in the fiscal year beginning July 1.
Depending on the severity and length of the pandemic in the U.S., that growth might instead be in negative territory. Parson budget chief Dan Haug did not respond to a request for comment Tuesday, but other states are planning for downturns or are already cutting programs.
Colorado, for example, expects to see a $750 million reduction in revenue, according to Colorado Public Radio.
In New Mexico, the Associated Press reported Democratic Gov. Michelle Lujan Grisham vetoed about $150 million in infrastructure spending as coronavirus concerns caused world oil prices to plunge. The oil sector is a mainstay of the New Mexico economy.
Blouin said a federal assistance package to states could blunt some of the damage. For example, a plan for Washington D.C. to pick up more of the cost of Medicaid could free up $690 million in state money.
“That would help significantly if our revenue declines,” Blouin said.
Some states are preparing to dig into their “rainy day” funds, which have been built up during the extended bull market.
Rather than stockpile revenue, however, Missouri Republicans who control the levers of government, have cut taxes, leaving the state with less cushion during an economic downtown.
Ross said the uncertainty surrounding coronavirus could lead to Parson having to wield his budget-cutting powers.
“In the event that are numbers are off, it is incumbent that he make the least impactful withholds to balance that budget,” Ross said. “Ultimately that responsibility falls to the governor’s office.”
The House will meet Wednesday, but only to approve a package of legislation designed to help the state respond to the spread of the disease.
But, in keeping with federal guidelines regarding large gatherings, Vescovo said he wants to limit the number of members on the House floor at any time.
“We encourage you to listen to the debate from your office and come to the chamber during roll call votes. We will hold the board open long enough for you to make it to the chamber,” he wrote in the memo to lawmakers.
Jack Suntrup of the Post-Dispatch contributed to this report.
