Gov. Parson prepared to make budget cuts if lawmakers don’t renew tax for Medicaid

Missouri News

JEFFERSON CITY, Mo. — Missouri’s governor said budget cuts could be coming to the state’s Medicaid program if lawmakers don’t find a comprise to renew an important tax. 

The General Assembly did not approve legislation before session ended in May to fund Mo HealthNet, better known as Missouri’s Medicaid program. Gov. Mike Parson said the clock is ticking to find a solution before withholdings from the state budget start. 

“It’s over a billion-dollar hole in the budget,” Parson said. “We’re talking about it every day.”

The Federal Reimbursement Allowance (FRA) program is a tax collected from medical providers like hospitals to support Medicaid. 

“We know we’re having a very difficult time trying to hire staff on that medical front, whether it’s mental health, whether it’s foster care, whether it’s day care. All the things that are affected by the FRA becomes very problematic,” Parson said. 

Parson told reporters Monday he’s prepared to make budget cuts since lawmakers didn’t get it done before they adjourn. 

“If there’s not some sort of agreement, somewhere we can have a solution. And if it doesn’t happen before July 1, there’s not going to be any choices. We’re going to have to start withholding starting July 1,” Parson said. 

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

“This is a huge deal,” Parson said. “What we’re talking about with the FRA, if we don’t get it across the finish line, and I mean the clock is ticking on this.”

What’s the holdup?

Lawmakers said the problem in finding a compromise is whether or not to allow Medicaid to cover contraceptives. During the last week of session, Sen. Paul Wieland, R-Imperial, attached an amendment to Senate Bill 1 that bans the use of FRA funds for contraceptives and abortions. 

Senate Minority Floor Leader John Rizzo, D-Independence, said in a statement: 

“The single biggest issue facing state government is the reauthorization of a clean FRA bill, which accounts for nearly $4 billion in healthcare funding across Missouri.

“This hasn’t happened because a group of Republicans in the Missouri Senate are determined to prevent women from accessing birth control. To them, denying access to birth control is more important then protecting $4 billion for Missourians’ healthcare.”

Parson said before he calls lawmakers back for a special session, he wants to make sure there is solution. 

“Hopefully, level heads prevail there, and we find a resolution to this problem and we get FRA done. But it has a dramatic effect on state government,” Parson said.

Special session ahead? 

Renewing the FRA is one of more than 13 requests Parson’s office has received for a special session. The governor said right now there is no plan for a special session. 

“A lot of people want things, but there is some sort of agreement on some of the hot button issues,” Parson said. “We just can’t move forward on that, and that’s just not as simple as calling a special session.”

Here is the list of requests for special sessions according to the governor’s office: 

Special Session Requests/Letters from Legislators 

  1. FRA with pro-life protections – Rep. Nick Schroer, R-O’Fallon
  2. FRA without pro-life protections – Rep. Sarah Unsicker, D-Shrewsbury
  3. Unemployment insurance overpayments – Rep. J. Eggleston, R-Maysville
  4. Banning critical race theory and the 1619 project in public schools – Rep. Chuck Basye, R-Rocheport and Sen. Cindy O’Laughlin, R-Shelbina
  5. Initiative petition reform and voter ID – Rep. Dan Shaul, R-Imperial
  6. Address the defunding of the Kansas City Police – Sen. Tony Luetkemeyer, R-Parkville and Rep. Doug Richey, R-Excelsior Springs
  7. Pass legislation to have the state take over the St. Louis Police Department – Schroer  
  8. Requested a veto of the COVID liability legislation that passed and call a special for “true COVID liability” – Rep. Justin Hill, R-Lake St. Louis
  9. Extend the sunset for the MASBDA tax credits – Rep. Don Rone, R-Portageville
  10. Eminent Domain (commonly referred to as “Grain Belt”) – Rone 
  11. Anhydrous Ammonia Regulations – Rone 
  12. Using SNAP benefits at local farmers markets – Rone  
  13. Extending the sunset on an ethanol tax credit – Rone 
  14. Creating a biodiesel tax credit – Rone 

Currently the $35 billion budget for next fiscal year is sitting on the governor’s desk. But Parson said he doesn’t think he can sign it without the FRA being renewed because, without it, the state only has enough money to pay the bills for six months.

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