JEFFERSON CITY, Mo. — Missouri Gov. Mike Parson has called for a special session as $722 million is on the line in the state budget.
The governor tweeted the update Tuesday just minutes after state lawmakers failed to meet his noon deadline to work out an agreement on a critical piece of Medicaid funding. Parson had said he would cut the $722 million out of the state budget on July 1, including $182 million in state funding for programs ranging from K-12 school busing to nursing home care.
"After laying out the grim reality of our state's financial future if [Federal Reimbursement Allowances] FRA is not extended, I believe legislators have now agreed to a compromise that will end this stalemate, so today I am announcing a special session to begin tomorrow at noon," Parson said in a news release Tuesday afternoon.
The video above is from Parson's budget briefing Monday afternoon.
At issue is a tax on hospitals and other medical providers that’s used to draw down federal Medicaid funding. Parson said without the tax, the state will face a nearly $1.4 billion funding gap over the next two years.
“The FRA program reduces the burden of MO HealthNet expenditures on the state budget and maximizes federal dollars coming to Missouri, and House and Senate leadership and Missourians know the detrimental consequences if FRA is not extended,” Parson said. “It is unacceptable to jeopardize critical investments in priorities like education, workforce development, and infrastructure, and we must get this done quickly to protect Missourians and continue investing in Missouri's future generations.”
The tax now is tangled in an effort by some anti-abortion lawmakers to ban Medicaid coverage for some contraceptives. Those lawmakers are trying to attach the ban to the tax.
During the legislative session that ended May 14, lawmakers proposed banning Medicaid coverage for "any drug or device approved by the federal Food and Drug Administration that may cause the destruction of or prevent the implantation of, an unborn child.”
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Fighting over the proposed ban derailed a bill that would have extended medical providers tax. Without an extension, the tax will expire Sept. 30.
Parson wants lawmakers to reauthorize the tax. He gave them time to work out an agreement, but time is running out. Parson said legislators need at least five days to pass a bill, prompting him to set the Tuesday deadline so there's enough time to pass legislation before July 1.
If lawmakers can’t come to an agreement, Parson has proposed a series of budget cuts to make up for the gap in funding. Planned cuts include $166 million for developmental disability caregiving, $88 million for nursing homes, and $20 million that was set to pay for school busing.
The potential budget crisis comes when Missouri should be flush with cash. Net revenues for the year were up 25% as of Friday compared to the same time last year. The state was up more than $2 billion compared to the year before.
"Let me be clear, now is a time that demands leadership among legislators and not an opportunity to play games with billions of dollars and millions of livelihoods in pursuit of narrow political interests," Parson said Tuesday.
The dispute is separate from a lawsuit overextending Medicaid coverage to some of those currently ineligible. Voters approved the expansion in August 2020, but lawmakers this year refused to fund it. The case was heard in a Cole County court Monday, and a ruling is expected within days.