State leaders address budget concerns during COVID-19 briefing Wednesday

JEFFERSON CITY, Mo. (KMIZ)

Gov. Mike Parson said Wednesday he is expecting a $500 million shortfall in revenue through June 30.

The governor and state leaders held a daily COVID-19 briefing Wednesday afternoon. During the news conference, Parson said coronavirus has seriously affected the state revenue.

The announcement came as the state health department reported at least 1,581 around the state have tested positive for novel coronavirus.

Parson included at least $180 million will be restricted from the 2020 budget to fight COVID-19. The governor said another $315 million in federal funding could be used in the budget shortfall.

You can watch the full daily COVID-19 briefing in the media player below.

Parson said many state departments will be affected by the budget restriction, including the department of higher learning and workforce development, department of transportation, the office of administration, department of natural resources, state education department and department of economics.

Most of the restrictions will come from spending on higher education. Budget documents show the state will withhold more than $77 million from the department, $61 million of which was dedicated to four-year colleges. Another $11 million will come from spending for community colleges.

Shortly after the briefing, UM System President Mun Choi released a statement saying the withholdings to the University of Missouri will total approximately $36.5 million.

“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 UM System and all four of our universities are also taking thoughtful but necessary actions and remain focused on achieving our mission for student success, research and engagement with the State of Missouri and beyond."

MU spokesman Christian Basi said it was still too early to tell how it would directly affect the Columbia campus. The school last week announced short-term spending limits, such as limited hiring and passing on merit raises for the year.

"There are a lot of pieces that we need to put together in the puzzle first before we have a completely clear picture, but we do expect to be able to make those decisions in the coming days and weeks," Basi said.

State Budget Director Dan Haug said the budget restriction was proactive.

"We are seeing unprecedented drops in revenue from the significant reduction of economic activity from people staying home," Haug said.

Rep. Kip Kendrick (D-Columbia), the highest-ranking Democrat on the House of Representative's Budget Committee, said he was not surprised to see a major part of the withholding come from higher education.

"In times of withholds, higher ed is usually one of the first places executives go in making that decision," Kendrick said. "I don't agree with it, but it's been a consistent theme at this point."

Kendrick said he expected the state to approve a supplement to this year's budget by next Wednesday. The Missouri Senate could take action on Tuesday to add amendments to the budget involving federal dollars sent in the Families First Coronavirus Response Act passed by Congress.

Kendrick said the loss of sales tax, income tax and corporate tax revenue all play a part in the potential half-billion dollar shortfall. The greatest hit, Kendrick said, could come from the delay of the tax deadline to July 15. Kendrick estimated that could lead to a loss of $40 million for the budget year, and create issues for next budget year.

Kendrick said the state is still waiting for guidance from the Treasury Department on how money in the most recent stimulus, the CARES Act, can be spent by states.

"Those federal dollars are going to be critical to helping us with the budgeting process moving forward," Kendrick said.