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story.lead_photo.caption Julie Smith/News Tribune Daniel Haug, director of Division of Budget and Planning, delivered the numbers Wednesday for the Parson adminstration budget for the upcoming fiscal year. Among other items in the budget is a proposal for state employee pay increase and for bonus money to incentivize or reward employees for exceptional work. Photo by Julie Smith / News Tribune.

The 2020-21 budget Gov. Mike Parson's administration shared Wednesday ahead of the State of the State address features a pay raise for state employees — though some state departments would downsize numbers of full-time equivalent employees, but not through layoffs, according to the state budget director.

Parson's proposed $30.9 billion state budget would be approximately $435 million larger than this year's — with sources continuing to be split about evenly between general revenue, federal and other funds.

Daniel Haug, director of the Office of Administration's Division of Budget and Planning, said net general revenue collections are expected to be about 1.9 percent more in fiscal year 2021 than the current fiscal year — and that does not take into account new, future revenues that could come in through means such as online sales tax collection or sports betting.

Of that assumed growth rate of 1.9 percent, President Pro Tem Sen. Dave Schatz, R-Sullivan, later said: "Obviously, we're a little more conservative than that on the Senate side. I think the House is even a little more conservative in that on their outlook. I tend to be a little more conservative from that perspective, but I think that one realistic thing that will happen is that when we get closer to the Senate having a budget, we'll have a clearer picture of really what that number should be or could be, and so if it tends to be a little higher than what we anticipated, then we have the ability to address that in our budgeting process."

Ahead of the speech, the nonprofit public policy organization Missouri Budget Project also had some doubts about the state's budget.

"The growth shown in recent revenue collections may be misleading because they're relative to a time of very weak collections. When seen over just two years, MO collections didn't even keep pace with inflation," said Traci Gleason, the organization's vice president for external affairs.

Haug called the budget's growth assumption "very conservative," and one that reflects strength in the state and national economies.

"I think the governor is responsible, trying to leave money on the bottom line, and I think at the end of the day, we'll accomplish that," Schatz added.

Parson and Haug said there's been $100 million left unspent on the bottom line, which they recommend putting into a cash operating expense fund — basically, a rainy day fund in case of economic crisis.

Haug said that recommendation is not in response to a recommendation from State Auditor and Democratic gubernatorial candidate Nicole Galloway.

Galloway in October released an audit that found the state was not saving enough for a potential financial crisis, and she recommended creating a second reserve fund to be used for budget stabilization in the event of a recession.

Parson's 2021 budget also recommends $26.2 million for a 2 percent increase in the pay for most state employees, that would be effective Jan. 1, 2021.

Haug said the states' Department of Transportation and Department of Conservation have their own pay increases based on department-specific work studies.

State workers got a 3 percent pay increase in the current fiscal year.

Parson also proposes cutting almost 330 full-time equivalent employees from the state workforce — about 250 of which would be from the Department of Labor and Industrial Relations and the Department of Corrections.

"In the labor budget, we have FTE in there to deal with the workload when there's high unemployment levels. There were not high unemployment levels. Those positions are not filled, so we cut those positions, because we want the budget to really reflect the reality of what is going on in the department," Haug said.

"If unemployment increases significantly, we would probably have to add some of those back, but we wanted to basically right-size that budget, so the number of employees they actually have is what's reflected in the budget," he said.

In his speech, Parson said Missouri's unemployment rate is at a historic low of 3.1 percent and has been below the national unemployment rate for 40 consecutive months.

"On Corrections, what they are doing is they are consolidating space within various prisons around the state, closing certain housing units and those types of things, but they have space in other housing units. So, what that lets them do is eliminate those positions," Haug said.

He added, however, none of the full-time equivalent employee cuts would be through layoffs — or the release of offenders, in the case of the Department of Corrections.

In his speech, Parson said his call this legislative session "is to propose initiatives aimed at building stronger communities, improving education and workforce development, revitalizing our infrastructure and making government more accountable."

To those ends, his proposed budget also includes funding to reimburse counties for costs associated with the prosecution and incarceration of criminal defendants, repair non-federal levees, provide services for Missourians with disabilities, and invest in school transportation and workforce education, among many other proposals.

The Office of Administration's budget information for fiscal year 2021 is available at oa.mo.gov/budget-planning/budget-information/2021-budget-information.

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