JEFFERSON CITY — Missouri has no budget shortfall and perhaps never will during the 2014 fiscal year that began this month. Yet that hasn't stopped Gov. Jay Nixon from making budget cuts based on concerns that the legislature might do something that could reduce future state tax revenues.
Nixon's recent announcement of $400 million of spending restrictions is the latest example of how he has tested the constitutional boundaries of a governor's authority to control the budget.
Nixon declared while making the spending cuts: "The authority there is clear."
House Speaker Tim Jones countered: "The governor has clearly violated his constitutional authority by withholding funding in a year where we have a significant budget surplus."
The fact that Missouri's top executive and legislative officials have opposite "clear" understandings of the state constitution is evidence that things aren't quite so clear.
The Missouri Supreme Court could provide some guidance. But it has yet to rule after hearing arguments in March on a legal challenge to previous budget cuts announced by Nixon in June 2011.
At issue is a section the Missouri Constitution that provides reasons for which a governor can withhold money that is budgeted to be spent.
The constitution states: "The governor may control the rate at which any appropriation is expended during the period of the appropriation by allotment or other means, and may reduce the expenditures of the state or any of its agencies below their appropriations whenever the actual revenues are less than the revenue estimates upon which the appropriations were based."
There seems to be general agreement that the phrase after the comma allows the governor to make spending cuts during a budget shortfall.
But Nixon announced more than $400 million of spending restrictions for education, building projects and other government services, even though Missouri began its fiscal year July 1 with a cash balance of around $450 million.
Nixon points to the first half the constitutional provision. He contends the authority to "control the rate" of expenditures allows him to make cuts even if the state has a budget surplus.
In this case, Nixon cites concerns that the state legislature might override his veto of an income-tax bill when it convenes in September. He contends the bill's various provisions — including one tax cut that is dependent on a yet-to-occur act of the U.S. Congress — could trigger the loss of hundreds of millions of state tax dollars before the fiscal year ends on June 30, 2014. It is a hypothetical scenario dependent, at least partly, on another hypothetical scenario.
Yet Nixon said it would be fiscally foolish not to cut spending now, noting that he could reverse the cuts later if the veto override of the tax-cut bill never occurs.
Republican legislative leaders "are out there saying they want to move forward on that policy," Nixon said. "That's very real."
In June 2011, Nixon cited the same constitutional authority while announcing $172 million of spending cuts to education and other services. In that instance, Nixon cited the potential for Missouri to incur tens of millions of dollars of unforeseen costs from a deadly tornado that hit Joplin a month earlier and from other natural disasters. As of this past week, the state's share of that disaster tab was $34 million, of which just $7 million had been paid.
State Auditor Tom Schweich, a Republican, sued the Democratic governor in 2011 on claims that Nixon exceeded his constitutional budget-cutting authority by failing to show revenues were falling short of projections upon which the budget was based. Schweich's attorney argued in court that to "control the rate" of spending merely means that payments can be spread out over the fiscal year instead of made in a lump sum. It cannot provide an excuse to cut spending during good times, Schweich's attorney argued.
Schweich declined to comment about Nixon's latest spending restrictions.
But others have not been shy about doing so.
Senate Appropriations Committee Chairman Kurt Schaefer, a Republican attorney from Columbia, contends that Nixon's latest cuts aren't justified.
"From a perspective of fiscal accountability, the restrictions are not necessary," Schaefer said. "He's simply using his political leverage."