Missouri governor warns millions will be cut from budget if lawmakers can’t reach Medicaid deal

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JEFFERSON CITY, Mo. — Missouri’s governor said millions of dollars will need to be cut from education, infrastructure and other departments if lawmakers can’t reach a compromise soon.

Gov. Mike Parson is calling on legislators to find a way to extend the Federal Reimbursement Allowances, or FRA. The program is a tax collected from medical providers like hospitals to support Medicaid. 

Parson said the state would need to come up with $1.4 billion over the next two years if the allowances aren’t renewed.

“That is frankly unacceptable,” Parson said Monday afternoon. “Our investments focus on improving our our state and preparing our future generations for tomorrow, and without them our state could fall behind.”

Parson announced a list of departments that could see funding restrictions and vetoes, if lawmakers don’t reach a deal. Those include:

  • Higher education
  • K-12 education funding
  • Capital improvement projects
  • Early literacy programs
  • School safety planning
  • Career center improvements
  • School transportation funding
  • A+ program
  • Social services, foster care, and adoption services
  • Health care, nursing homes, independent living centers
  • Emergency managed service providers
  • Health care providers serving those with developmental disabilities

“This almost affects every capacity that we have in state government to be able to go down this road,” Parson said. “Even recent legislative wins that we are eager to sign would be rejected do to the pending budget gap.”

Parson said his office is ready to act on the compromises that have been agreed upon, and set a noon deadline on Tuesday for lawmakers to reach a compromise.

“Our solution addresses the concerns that have been raised while keeping Missouri federally compliant,” Parson said. “For those who want to move the goal posts yet again, know that you and you alone will own this and the devastating effects it will have on Missourians and our economy if the FRA is not extended.”

Earlier this month, Parson said the clock was ticking to find a solution and that budget cuts to the state’s Medicaid program could be necessary if lawmakers didn’t find a compromise.

The General Assembly did not approve legislation before session ended in May to fund Mo HealthNet. That left a billion-dollar hole in the budget.

The FRA brings in around $1.5 billion for Medicaid, and then allows the state to receive $2.7 from the federal government.

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