The Capitol Report | December 1st, 2016

Upcoming State Budget & Overtime Regulations

As the members of the General Assembly look ahead to the 2017 session, we do so with the knowledge that we will face a difficult budget situation. According to the current House Budget Chairman, the new governor may be faced with the need to withhold as much as an additional $200 million from the $27.2 billion state budget.

The good news is that the state has seen revenue growth of approximately 4.5 percent since July. The bad news is that the state saw revenue numbers drop dramatically in the final months of the previous fiscal year, which put the state in a significant budget hole. Now, the state needs growth in excess of 6 percent in order to prevent the need for more withholds and to restore the cuts that have already been made.

Because growth at such a high level is unlikely, the Budget Chairman is set to work with the incoming governor to find areas in the budget where withholds can be made without negatively impacting important services and programs.

Last May, the Wage and Hour Division of the Department of Labor finalized the Fair Labor Standards Act, which was set to go into effect today— Dec. 1, 2016. This law “guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee’s regular rate of pay for hours worked over 40 in a workweek.” However, recently, a federal judge in Texas has issued an injunction against these new Department of Labor rules. In his decision, the judge cited his belief that the department had gone beyond the intentions of Congress and its authority in implementing the new rulings.

Also, in response to these new regulations, 21 states and more than 50 business organizations filed suit to stop its implementation. The Texas judge sided with the plaintiffs over the federal government. Most likely this ruling will be appealed, but until that time the new rules are placed on hold.

You may read in more detail about what is happening at your State Capitol below. As always, I will work diligently for you as your State Representative.

-Jason

Legislature Prepares for Difficult Budget Situation

As the members of the General Assembly look ahead to the 2017 session, we do so with the knowledge that we will face a difficult budget situation. The current fiscal year has seen the governor withhold more than $150 million from the state operating budget. That number will likely grow as lackluster revenue numbers may force the incoming governor to make additional withholds. According to the current House Budget Chairman, the new governor may be faced with the need to withhold as much as an additional $200 million from the $27.2 billion state budget.

The good news is that the state has seen revenue growth of approximately 4.5 percent since July. The bad news is that the state saw revenue numbers drop dramatically in the final months of the previous fiscal year, which put the state in a significant budget hole. Now, the state needs growth in excess of 6 percent in order to prevent the need for more withholds and to restore the cuts that have already been made. Because growth at such a high level is unlikely, the Budget Chairman is set to work with the incoming governor to find areas in the budget where withholds can be made without negatively impacting important services and programs.

Aside from concerns about the current budget, the Budget Chairman also noted the state faces a significant hurdle when working on the budget for the next fiscal year. As he pointed out, the cost of Medicaid and its related programs has grown, and continues to grow. Including the growth in Medicaid, state departments anticipate needing an additional $550 million in the operating budget for the next fiscal year. In order to keep up, state revenues would need to grow by six percent. In the event revenues do not grow at that level, the Budget Chairman says the state will have to take a serious look at ways to bring the cost of Medicaid and other programs under control.

Overtime Regulations

Last May, the Wage and Hour Division of the Department of Labor finalized the Fair Labor Standards Act, which was set to go into effect today— Dec. 1, 2016. This law “guarantees a minimum wage for all hours worked during the workweek and overtime premium pay of not less than one and one-half times the employee’s regular rate of pay for hours worked over 40 in a workweek.” However, recently, a federal judge in Texas has issued an injunction against these new Department of Labor rules. In his decision, the judge cited his belief that the department had gone beyond the intentions of Congress and its authority in implementing the new rulings. In essence, the new overtime rules would raise the minimum salary allowed for an employee to be considered exempt, i.e., paid a flat salary rather than being paid overtime for work hours beyond 40 a week. Also, some have claimed that the new department rules have very cumbersome paperwork requirements for employers to justify the exempt status of an employee. In response to these new regulations, 21 states and more than 50 business organizations filed suit to stop its implementation. The Texas judge sided with the plaintiffs over the federal government. Most likely this ruling will be appealed, but until that time the new rules are placed on hold.

I am committed to serve the constituents of the 120th District, so please feel free to contact my office anytime at 573-751-1688. Your District 120 Capitol Office is 201 W Capitol Ave, Rm 115-H, Jefferson City, MO 65101. If you wish to unsubscribe from this report, please email Dylan Bryant at dylan.bryant@house.mo.gov

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