Carthage Republican takes ax to Parson budget, slashing education, Medicaid funds, adding $725 million for SW MO highway projects

By Rudi Keller

Missouri Independent

A state spending plan for fiscal 2025 delivered Thursday in the Missouri House cuts $2 billion from the proposal Gov. Mike Parson made in January, largely through adjustments for the depletion of pandemic-era federal funding and the decline in Medicaid enrollment


(Photo- House Budget Chair Cody Smith, R-Carthage, summarizes his budget proposal to reporters Thursday during a news conference with Republican House members (Annelise Hanshaw/Missouri Independent).

The proposal from House Budget Committee Chairman Cody Smith achieves those cuts despite several additions, including $727.5 million for major reconstruction projects along Interstate 44 in southwest Missouri.

Smith presented his $50.7 billion version of the budget for the year beginning July 1 to the 37-member committee and scheduled one day for debate on March 25, when lawmakers return from their annual mid-session break. He got a foretaste of that debate when he refused a request Thursday to discuss specific changes from state Rep. Peter Merideth, the St. Louis Democrat who is the ranking minority member on the committee.

Committee members who want to propose amendments to the budget plan must have their drafting requests to the staff by Tuesday afternoon.

“We just glossed over a whole lot of details in here that I know I have several questions about and suspect other members do,” Merideth said.

Smith, who is a Republican candidate for state treasurer and eager to start a week away from the Capitol, said he would speak to colleagues privately about individual items but not as a group.

Along with receiving Smith’s revisions, Thursday’s hearing was called to hear public testimony on 17 budget bills. No one showed up to testify.

That made a conversation about the choices Smith made even more important, Merideth said.

“We already basically just neglected public testimony by doing a 30-second call on this day for the entire budget at once,” Meredith said. “It’s pretty important that these conversations not just be behind closed doors.”

The meeting on March 25 is the time for questions, Smith replied.

“We will have a very thorough discussion about these committee substitutes at our markup process and that will happen in due time,” Smith said.

Some of the biggest reductions proposed by Smith are in the Department of Elementary and Secondary Education, where federal fund spending is $594 million below the $3.05 billion in Parson’s plan, and in the Department of Social Services, where Medicaid eligibility reviews have cut rolls by 159,000 from the May peak of 1.5 million people.

There are 88,000 fewer children on Medicaid, 22,000 fewer adults with children on the program and 23,000 fewer adults who enrolled under the Medicaid expansion program approved by voters in 2020.

Smith’s plan cuts $174.7 million in general revenue and $400 million in matching federal funds from Parson’s Medicaid proposal to adjust funding to the lower enrollment numbers.

“Redeterminations logically, and rightfully so, have started to reduce the overall size and cost of Medicaid,” Smith said at a news conference with Republican leaders.

Missouri has ample surplus in its general revenue fund, built up as revenues soared and COVID-related federal funding reduced the need to use those funds. At the end of February, the treasury held about $6.4 billion in general revenue and other funds that can be spent like general revenue.

Tax receipts are no longer growing at double digits but receipts for the fiscal year so far are tracking closely with projections and the state should take in about $13.2 billion in the coming fiscal year.

Parson proposed spending $15 billion in general revenue and Smith’s plan would use $14.8 billion. Smith said his plan reduces the reliance on surplus funds for ongoing programs and he achieved the savings by using other funds, especially lottery revenue in education programs, to replace general revenue.

In education programs, the budget funds a small increase in the state adequacy target, one of the basic pieces of the funding formula that delivers aid to school districts. It also maintains full funding of school transportation costs.

The small increase is not enough to cover the needs of school districts, Merideth said at a news conference with Democratic leaders.

“Our formula hasn’t been updated to reflect current dollar amounts and needs,” he said. “If we don’t do that, we’re still essentially making cuts as far as I’m concerned to schools every year.”

For higher education, the general increase of 3% proposed by Parson has been pared to 2% and will be listed as a one-time grant rather than a permanent increase. Smith said he’s dismayed that state support for two- and four-year institutions remains tied to historic funding rather than being tied to student outcomes.

“This is my eighth year and my first year here we were talking about performance pay at public higher education institutions,” Smith said. “And we’re still kind of where we started some eight years ago.”

Areas being boosted in Smith’s plan include funding for agencies that support people with developmental disabilities and reimbursements to nursing homes for Medicaid recipients.

Last year, lawmakers boosted rates for disability agencies so they could pay staff at least $16 an hour. This year, the budget will increase that allowance to $17 an hour, Smith said.

“Since we did half of that last year, we are coming back and doing the second half of that this year,” Smith said.

Smith also said he’s capping the cost of the program so it does not grow in the numbers it is serving.

State Rep. Deb Lavender, a Democrat from Manchester, said after the hearing that Smith’s unwillingness to answer questions means members are in the dark about what he is doing for residential support workers.

“We don’t know what that means,” she said. “And now being on spring break, we have to hope to catch him to be able to discuss before we’re back here for markup. So the timing of all of this just further eliminates any other participation of anybody else in the budget process.”

The plan to set aside money for improvements on I-44 mirrors last year’s $2.8 billion appropriation to widen Interstate 70 from Blue Springs to Wentzville. That plan, which saw the first contract awarded last month, is funded half with general revenue surplus and half with borrowed funds.

Smith wants to set aside $363.75 million in general revenue, and the same amount in bond funds, for projects in the Joplin, Springfield and Rolla areas. In Joplin, it would pay for upgrades to the I-44 interchange with Interstate 49. In Springfield, it would pay to add new lanes through the city.

“This is a generational investment to rebuild these main arteries,” Smith said.

The biggest unknown in the budget is whether lawmakers will renew the provider taxes essential to sustaining the Medicaid program. Known as the federal reimbursement allowance, the taxes are paid by hospitals, nursing homes, ambulance providers and pharmacies as a mechanism for drawing additional federal funds and boosting payments for Medicaid services.

A Senate bill to renew the taxes before they expire later this year has been stalled over demands that it include provisions excluding Planned Parenthood from providing Medicaid services.

If that bill or some version of it is not passed, the only recourse will be to either tap general revenue or cut Medicaid spending by about $4 billion.

A similar impasse forced lawmakers into special session in 2021 to renew the taxes.







A bill excluding Planned Parenthood from Medicaid has already passed the House. Smith and other GOP leaders said they were confident the Senate would pass it and the provider taxes without endangering the budget.

The budget must be completed by May 10 and members of the Missouri Freedom Caucus have promised to debate every increase when the budget makes it to the Senate floor. Sen. Bill Eigel of Weldon Spring, a candidate for governor and a member of the Freedom Caucus, said the prospect of cutting $4 billion from the budget does not daunt him.

“I don’t know,” Eigel said, “if I’ve ever been threatened with a good time like that before.”