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Missouri may need a special legislative session for some of the stimulus money coming to the state from the American Rescue Plan Congress approved in March, but the bulk of spending will likely wait until the next state budget is proposed in January, Budget Director Dan Haug said Tuesday.

In testimony to the House Subcommittee on Federal Stimulus Spending, Haug said the comment period just ended for rules that will govern how the state uses $2.8 billion in federal stimulus money.

"It is one of the reasons we decided not to try to rush through and appropriate this last session, because we didn't know all the rules yet," Haug said.

The $1.9 trillion federal COVID-19 recovery and stimulus plan included money to cover revenue losses to state and local governments as well as funds dedicated to specific programs such as education, health care and transportation.

The same bill provided $1,400 individual payments and the child tax credit payments that began last week.

The state has until the end of December 2026 to spend the $2.8 billion in federal stimulus money it will receive, Haug said.

Other funds dedicated to specific programs may require the state to use the money faster, he said, and that is being studied.

If so, that may mean Parson will call lawmakers into special session this fall to write appropriation bills.

"I don't anticipate this $2.8 billion being part of that," Haug said. "I think that is something we will make recommendations for as part of our regular budget submission in January."

The subcommittee, led by state Rep. Doug Richey, R-Excelsior Springs, was appointed during the session and took testimony in April from state and local officials, as well as state colleges and universities. In that hearing, the Missouri Highway Patrol asked for $88 million to build a new academy to train recruits and higher-education institutions asked for about $420 million, almost all in order to renovate or make major repairs to existing buildings.

The hearing Tuesday began with Haug's overview and included discussion of how the state could overhaul its computer systems. Some programs in use by the state are written in the COBOL computer language, first developed in the 1950s.

Richey encouraged the committee to think big about a new state information technology system.

"I am starting from the standpoint that money is not the issue," he said. "Whatever dollar we spend will have to be well spent, that is always part of the equation. But we can't say now we don't have the money to fix the system, because we do."

The $2.8 billion fund must be spent in three general areas, Haug told the committee. The state can pay for health care needs directly related to the COVID-19 pandemic and provide economic support for individuals, small businesses and heavily affected industries, he said.

The money can also be used for repairing and replacing water, sewer and broadband infrastructure, he said. That includes replacing lead water pipes in older communities, Haug said in response to a question from state Rep. Kevin Windham, D-Hillsdale.

A recent report from the Natural Resources Defense Council shows Missouri has the sixth most lead service lines, pipes that carry water from water mains to residents' homes, of any state in the U.S. Adjusted for its population, it has the fourth highest number of lead pipes per 100,000 residents.

The portion that has the most flexibility, Haug said, is intended to cover revenue losses for state government due to the pandemic. The calculation, however, is not simple, he said.

"This is probably the category that has frustrated me the most," Haug said.

Revenue from fiscal year 2019, which ended June 30, 2019, will be compared to revenue during the calendar year of 2020, as well as 2021, 2022, and 2023, he said.

Haug said he believes 2020 will show a decline in revenue.

"I am not sure we will for the subsequent ones because we have done well," he said.

Missouri ended the 2021 fiscal year with general revenue of $11.2 billion, more than $1 billion above the estimate made in January.

On June 30, the general revenue fund held $2.35 billion, more than the balance on that date in the past five years combined and $1.5 billion more than June 30, 2020.

The federal calculation of revenue loss, using a formula created by the Census Bureau, will include more than general revenue receipts. Because those calculations take time, Haug said, Missouri will have to make an estimate of how much it can use for that portion.

"We are trying to come up with the best definition of revenue, but we are also trying to come up with a definition that is most favorable to Missouri, within reason," he said, "because we are going to have to defend it on the back end."

The Missouri Independent is a nonprofit, nonpartisan news organization covering state government and its impact on Missourians.

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