JEFFERSON CITY — Missouri Gov. Mike Parson said Wednesday the state would freeze about $180 million in planned spending as a result of the coronavirus-caused economic downturn.
Parson said the state faces a $500 million budget shortfall for the current fiscal year, which ends June 30.
In addition to the $180 million withheld Wednesday, Parson said he was hopeful the state would be able to use $315 million in federal funds to plug the budget hole.
“Doing so still may not be enough to solve the problem,” Parson said, adding that more cuts could be on the way.
Parson and state Budget Director Dan Haug said the lagging revenue collections would likely continue into the next fiscal year, which begins in July.
“COVID-19 has had serious impacts on our anticipated economic growth,” Parson said during his daily briefing. “And now we are expecting significant revenue declines, some of which may be larger than those experienced during the Great Recession.
“I want to assure you that these restrictions are absolutely necessary,” Parson said.
Higher education will suffer the most. A list of budget restrictions said the state would restrict $61.3 million from four-year higher education institutions and $11.6 million from community colleges.
According to the list, the state will withhold $2.4 million from the University of Missouri’s Precision Science Initiative and $5 million in lottery funds from the Fast-Track scholarship program, which Parson pushed last year.
In total, the plan withholds $81.6 million from the Department of Higher Education and Workforce Development.
“Restrictions like that for higher education institutions are going to be painful for Columbia and other communities across the state,” said Rep. Kip Kendrick, D-Columbia, whose district includes the University of Missouri.
Kendrick, the top-ranking Democrat on the House Budget Committee, said he wasn’t surprised to learn that higher education was taking a hit.
“There’s not much fat left in the budget,” Kendrick said of the state’s annual $30 billion spending plan. “Not that higher education’s fat, but I think that some people view higher education funding as more discretionary than other pots.
“There’s not a whole lot of discretionary funds that aren’t mandated expenditures left in the budget,” he said.
The University of Missouri System said in a news release it would lose $36.5 million as a result of Wednesday’s announcement.
Mun Choi, president of the system, with four campuses statewide, said in a statement that university leaders expect to “make additional difficult decisions in the future.”
“We appreciate everything that our elected officials are doing during this unprecedented time,” Choi said. “The state is working hard to prioritize its resources, and we must all work together to get past this crisis.”
The Parson administration also was poised to restrict $54.2 million that had been slated for repairs and maintenance, and $12.2 million from the Multipurpose Water Resource Program, a grant program under the Department of Natural Resources.
Within the Department of Economic Development, the plan restricts $6.5 million from the Division of Tourism, $2.9 million from the Missouri Technology Corporation and $3.3 million from the Missouri One Start Job Development Program.
Parson, a Republican sworn in on June 1, 2018, had so far been able to run the state without using his power to freeze spending.
The last time a Missouri governor announced major budget restrictions was in June 2017, when former Gov. Eric Greitens announced $250 million in cuts amid lagging revenue collections.
Wednesday’s announcement affected spending during the current fiscal year, which ends June 30.
In January, Parson presented a budget plan for the fiscal year beginning in July that assumed 1.9% growth. He has since promised major changes.
Lawmakers have yet to return to the Capitol to resume budget talks. They are scheduled to return next week to take up debate on an emergency spending plan that will allow the governor to spend federal stimulus money.
The supplemental spending plan approved by the House earmarked $33 million in federal aid. Democrats had sought to bump that amount to more than $80 million, but were rebuffed by Republicans who control the chamber.
Parson’s maneuver Wednesday signaled the amount needed is significantly more than what the GOP signed off on before leaving the Capitol March 19 for an extended break.
Amid the virus outbreak, the state has also pushed back the tax filing deadline from April 15 to July 15, meaning many tax receipts will likely flow later than usual — a potential cash flow headache.