Nixon ends freeze on $215M of budget items

JEFFERSON CITY, Mo. -- Missouri Gov. Jay Nixon on Thursday released $215 million for education and other state services he had frozen while campaigning to sustain a veto of an income-tax cut.

Nixon's announcement came a day after the Legislature failed to get the two-thirds majority needed to override his veto of tax-cut legislation, which the governor contended would have punched a hole in the state budget. The released funds account for a little more than half of the $400 million Nixon restricted when the state budget took effect July 1.

It includes $66 million in basic aid for K-12 schools and $34 million in core funding for higher education institutions, plus other allotments for education. The released money also will allow a pay increase to go forward for state employees and health-care providers in Missouri's Medicaid system.

Despite the demise of the tax cut, Nixon maintained a hold Thursday on $185 million of budgeted expenses, primarily for repairs and construction at state buildings.

He also froze a $1 million appropriation to help rebuild a burned-down vocational education school in northeast Missouri. Lawmakers enacted that expenditure Wednesday by overriding Nixon's original line-item budget veto of it.

Nixon's budget director, Linda Luebbering, said the governor temporarily restricted that vocational school expenditure to determine whether there is enough money in the particular fund to pay it and whether the fund can legally be used for the building.

Republican lawmakers had criticized Nixon's original spending restrictions as unjustified. On Thursday, they questioned his continued spending freeze, as well as his new roadblock to the $1 million school appropriation.

"He is a politically motivated governor who continues to use the children and students of this state as political pawns," said House Speaker Tim Jones, R-Eureka.

State Rep. Todd Richardson, R-Poplar Bluff, said he will propose a constitutional amendment next year that would curtail the governor's ability to withhold budgeted expenses when revenue is strong.

"I believe the Missouri Constitution is clear in limiting the governor's withholding power to times of emergency or funding shortages, but he has continued to challenge that limitation to the point we now lack clarity on this important issue," Richardson said in a written statement.

Missouri ended its 2012 fiscal year in June with 10 percent revenue growth over the prior year and a cash balance of nearly $450 million.

Luebbering said the continued spending freeze was necessary because of other concerns about the state's finances.

She said the budget assumed about $110 million of revenue or savings from a tax credit overhaul and an amnesty program encouraging delinquent taxpayers to pay up -- neither of which became law. The budget also could incur $29 million of unanticipated revenue losses from a corporate tax accounting change passed by the Legislature and signed by Nixon, Luebbering said.

On Wednesday, Attorney General Chris Koster announced the state lost an arbitration case with tobacco companies that could result in the loss of all or part of this year's expected $130 million payment from a 1998 tobacco settlement. Luebbering said that could have an effect on whether the state building projects can go forward.

Nixon said in a written statement that his administration would "continue to monitor the numbers carefully to ensure we protect our perfect AAA credit rating and keep the state on a fiscally sustainable path."