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Governor Mike Parson’s Research Plan Interstate 44 Improvements On using interest earned from funds set aside for I-70 reconstruction, House budget authors faced bipartisan questions Wednesday asking why the money was not set aside in the general fund. did.
Rep. Deb Lavender, D-Manchester, and Rep. Dirk Deaton, R-Noel, slammed state Treasurer Vivek Malek and representatives of the executive branch for diversion.
Both Lavender and Deaton believe this violates state law.
“This agency has 11 different administratively created funds that maintain their own interests,” Lavender told Malek, the administrator of state funds. “Thus, we see that these funds that have been created are inconsistent with the content of our statutes.”
After Deaton finished questioning Malek and Hannah Swan, the executive branch’s legislative liaison, he was not satisfied with the answers.
“I understand the answer,” said Deaton, who is vice chairman of the budget committee. “I don’t think we necessarily agree. I mean, to me, the law is very clear.”
of regulatory lawThe more than 100-year-old fund states that while funds established under statute or the Constitution, such as the Highway Fund, can receive interest, interest on other Treasury funds goes to the General Fund Fund. There is.
Malek manages approximately 500 accounts.
For example, the General Fund receives interest earned from $2.1 billion in federal funds held as of Dec. 31 to complete projects under the American Rescue Plan Act of 2021.
Marek said the I-70 project is a “unique situation” because past general fund funding for Missouri Department of Transportation projects has been set aside in the state’s highway fund. Funds established under the Constitution retain interest.
“Normally it would go to the DOT account, but in this current scenario it was created on its own by including some of the OA,” Malek said.
In their testimony, Marek and Swann tried to convince lawmakers that interest in the OA I-70 project fund, estimated at $42 million, could be used like money in the general fund fund.
“Whether it’s in the (general fund) or in this other fund, it’s a general fund that can be spent on anything the General Assembly wants,” Swan said. Ta.
Neither Lavender nor Deaton accepted it.
“The Legislature very specifically created the fund (in the Executive Branch) because of concerns about the Department of Defense spending these funds,” Lavender said. “And now for it to maintain its own interests, I think it defeats the purpose of why we created that fund in the first place.”
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Ten other funds identified by Lavender held $735.8 million as of Dec. 31. The largest is the Water and Wastewater Revolving Fund, which holds $705.6 million and provides low-interest loans for drinking water and wastewater projects.
Deaton said the state currently has a large surplus in its general fund, but that is unlikely to continue.
“If it started in the general fund, I think there’s good reason to think it should go back to the general fund,” he said. “The law is the law. We should obey the law.”
The state fully funds school transportation costs, which have been underfunded for decades, increases health care costs and fees for children’s programs, and gives state employees a long-standing minimum pay increase to match inflation. giving a raise. It’s all thanks to our robust General Fund, which had a balance of $5.1 billion as of June 30th.
However, revenue has been flat throughout the year and is expected to remain flat for some time.
“Imagine a world where the General Fund doesn’t have that much left, and suddenly there’s a hole in the state budget because of a recession or something,” Deaton said. “If we needed to spend this money on something else, if we were pressured to do so, we would have people in helmets walking down the halls saying it was money for roads.”
This year’s state budget includes: $2.8 billion to expand I-70 From Wentzville to Blue Springs. Half of the funding came from the general fund and the other half from bonds sold as needed to finance construction. The General Fund portion was allocated to a newly established fund, the OA I-70 Project Fund.
The first $420 million contract is expected to be signed by the Highway Traffic Commission on February 14th.
In his budget statement, Parsonson asked lawmakers to transfer $14 million in interest income to a new fund to create improvements along Interstate 44. Lawmakers last year appropriated $20 million from the general fund to conduct a federally required study before work begins.
State revenues are flat, but interest income is increasing. Missouri is reaping a windfall from a combination of the highest interest rates in years and record state treasury balances.
In 2021, the accounting firm reported. $32 million in interest The average daily balance is $7 billion. Just under $10 million went to the general fund.
For the fiscal year ended June 30, Total interest amount is $393.8 million The average balance is $16.2 billion. His share of general income was $226 million.
In the first six months of the current fiscal year, state deposits were Paid $277.6 million The average balance is $17.9 billion. General revenue has received $167 million of year-to-date interest.
The average interest rate has increased from 0.46% in 2021 to 3.11% this fiscal year.
Neither Mr. Malek nor Mr. Swan directly answered the question of who decided that the I-70 fund should maintain its own interests. Mr Malek said it was done “in consultation with the OA”, but admitted he was responsible for the outcome.
“We have the ultimate authority to create what we want it to be,” Malek said.
Malek did not say whether he would start putting the interest money into the general fund or continue depositing it in the I-70 fund.
Mr. Swan, who spoke before the committee hours after Mr. Malek, did not say who in the administration wanted to keep an interest in the fund or whether any legal opinion had been considered.
“At the end of the day, it’s going to be the Treasury Department that actually transfers the funds,” she said. “The OA doesn’t actually make this decision.”
Lavender said she was disappointed by Swann’s unwillingness to reveal who in the administration was involved in the decision to put interest into the I-70 fund.
“She never answered my question about who decided that this fund created by the administration would keep interest,” Lavender said. “That’s the biggest concern.”
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