Budget Withholdings

JEFFERSON CITY - Gov. Jay Nixon imposed a series of restrictions in the budget passed by the legislature totaling $46 million.

Nixon said the budget withholding was necessary because of an appeals court decision that lowered by $50 million the amount of money the state administration predicted the state would collect from a settlement agreement with the tobacco industry.

"This unexpected loss of funds must be accounted for through spending restrictions to keep the budget in balance and our AAA credit rating intact," Nixon was quoted as saying in a news release issued by his office Monday, Oct. 19.

Hardest hit by the governor's spending restrictions were health and social services programs. More than $35 million of the cuts came from three departments:

Social Services - $18.2 million
Mental Health - $12.6 million
Health - $4.4 million

Nixon's written statement stressed that he sought to minimize the impact by "reducing spending from new programs yet to get underway and funding increases that would grow the size of the budget."

Republican Lt. Gov. Peter Kinder promptly attacked the governor's action.

"It is troubling that Gov. Nixon has decided to cut funding for children, law enforcement, the mentally ill, the disabled and other needed programs," Kinder was quoted as saying in a news release.

Kinder argued that the budget cuts were not necessary because state revenues have grown in the first three months of the budget year and the state has what Kinder described as a $325 million in an unspent surplus.

The tobacco money comes from a national settlement agreement between the tobacco industry and the nation's states, many of whom had filed suits against the major tobacco companies claiming diseases caused by smoking had expanded their Medicaid spending.

Under the settlement, the states agreed to impose higher taxes on tobacco companies that were not part of the settlement and, thus, did not have to pay the states.

Missouri, however, was accused of not fully complying with that provision of the agreement. An arbitration panel ultimately ordered a cut in tobacco payments to the state, but a state circuit court subsequently lowered the penalty by $50 million.

Last month, that court decision was overturned by the Eastern Missouri Court of Appeals.

Nixon said the state attorney general was planning an appeal, but a decision was not expected until after the the budget year that concludes June 30, 2016.