The $200 million Fulton State Hospital project will move forward in the new state budget that begins next week after Missouri Gov. Jay Nixon signed it into law Tuesday.
However, the governor vetoed the $6 million that lawmakers budgeted to renovate the current St. Mary's Health Center complex.
"While I thought that the initial investment there was a good idea, if we had the fiscal resources to do it," Nixon told reporters, "expanding that physical plant here - in this kind of a situation with a continuing cavalcade of tax cuts and tax breaks - is just not fiscally prudent."
Nixon last January had announced the St. Mary's project along with hospital and Lincoln University officials, saying St. Mary's had agreed in principle to donate the complex after the hospital moves to its new building in November. Then, LU's growing nursing program would be moved to the old hospital complex.
Linn State Technical College's medical technician program also would have been given some of the old hospital space.
Both Nixon and Budget Director Linda Luebbering said the talks between St. Mary's and state officials had ended.
"Obviously, we believe - based on the budget we have in front of us - that we can't afford to go forward with that project," Luebbering told reporters in a budget briefing after Nixon's news conference.
Lawmakers proposed using some of the former hospital for state offices, to free up more room in the Capitol.
But, the budget director explained: "The governor noted he is going to continue to downsize state government, so we simply cannot afford a new state building at this time."
And, if lawmakers override Nixon's veto?
"We'll see what happens in September, and take actions at that time," she said.
The governor also cancelled a $2.8 million appropriation as the state's share of LU's new campus recreation center, and he withheld the $500,000 increase in Lincoln's match for federal land grant funds until there are funds available.
Nixon's budget actions affecting Jefferson City were part of a total $276 million in vetoes and $846 million in spending restrictions the governor announced Tuesday morning.
"As governor, it is my responsibility - under the Missouri Constitution - to keep the budget in balance, by making sure that the spending authorized by the General Assembly does not exceed available revenue," Nixon said.
But the governor added, the administration's review of the lawmaker-passed budget - and the effects of a number of bills creating new programs or cutting taxes - determined that the final budget "is more than $786 million out-of-balance," requiring multiple, difficult cuts to nearly every portion of the state of government.
In addition to vetoes and withholdings, Nixon said, he's cutting another 260 full-time state employees, adding to the 4,600 positions eliminated since he became governor in January 2009.
Although department directors still must determine those cuts, Luebbering said 52 of them are in the Revenue department's seven taxpayer assistance centers around the state - including the Jefferson City office.
Nineteen regional offices, including seven at the Department of Revenue, six at the Department of Natural Resources and six at the Department of Mental Health will also close.
He withheld the 1 percent pay raise for all state employees set to begin next Jan. 1, subject to being released if more revenue becomes available.
And he vetoed $1.5 million from a nearly $13.63 million increase in state payments for the Missouri Consolidated Health Care Plan.
State Rep. Jay Barnes, R-Jefferson City said, "I'm hopeful that his withholds to the pay increase and deferred compensation will be withdrawn at a later date, and I'm going to do my best to get his veto of $1.5 million designated for state employee health care overridden."
Nixon cited several main reasons for his budget actions, including lawmakers passing a series of tax cut bills with revenue reductions that were not included in the budget calculations, reliance on $101.8 million in tobacco settlement payments that will not be available, revenue from a tax amnesty program that lawmakers failed to pass, lawmakers' continued inaction on proposals to expand Medicaid that would bring more federal money to the state, adding funding to Nixon's budget proposal for new government buildings and more than 30 new programs.
Barnes said the governor "has overstated the costs of many of the sales tax bills that he vetoed, and regardless of whether they are likely to be overridden or not, is using his budget powers as a bludgeon."
State Sen. Mike Kehoe, R-Jefferson City and a member of the Senate's Appropriations Committee, said, "Cutting funding for the St. Mary's project and cutting state jobs, while also slashing money to education reveals the governor's true priority: to make himself look good."
Kehoe added, "The same governor that held a press conference touting the merits of the St. Mary's project, jettisoned it without discussion. The same governor that in his State of the State committed to fully funding the foundation formula in two years, chose education as the primary target of his withholdings."
House Speaker Tim Jones said, in a statement, "The people of this state should not stand for a governor who provides no leadership on issues that would grow our economy while also serving as a roadblock to our efforts to increase funding to education."