About $95 million in Missouri marijuana-tax revenue that voters set aside for veterans services, public defenders and drug-addiction treatment programs sat unspent at the end of the last fiscal year.
And budget projections show that unused pile of cash would still be more than $60 million over the next two years unless lawmakers authorize the intended beneficiaries to use it.
The unspent money was a key criticism of a report issued last month by State Auditor Scott Fitzpatrick, who hammered state lawmakers and the governor for allowing the funds from sales tax on marijuana to stagnate.
Under the Missouri Constitution, the money can’t be spent on anything other than those three areas.
“Missouri voters passed both medical and adult-use marijuana programs with the requirement that the proceeds of these programs would provide needed resources for veterans, the public defender system and addiction programs,” Fitzpatrick’s audit says. “In addition, the Missouri Constitution contains clear language for how these funds are to be distributed. Ensuring these programs have timely access to the funding legally dedicated to them is necessary.”
Gov. Mike Kehoe’s budget proposes transferring $131.7 million of recreational marijuana money into the three beneficiaries’ funds. That’s $40 million each for veterans and addiction treatment programs. The public defender system would receive $51.7 million, to make up for funds that lawmakers withheld last year.
But moving the money won’t address the problem if lawmakers don’t authorize the three groups to spend it.
This will be the second year the public defenders system has struggled to get lawmakers to approve what the office contends is much-needed pay raises and social workers. The state agencies overseeing veterans and drug-addiction treatment programs are having more success getting their requests green lit this year.
Even if lawmakers and the governor approve the budget as it’s currently proposed, there could be a combined $61.5 million sitting in those three funds that beneficiaries still can’t touch.
Long-awaited pay raises
Last year, the public defender’s office wanted to use some of the cannabis money to increase their attorneys’ starting pay from $65,000 per year to $70,000. That would align the salary with the attorney general’s office entry-level pay.
But the House shot it down.
Matthew Crowell, director of the Office of the State Public Defender, again asked for raises for all employees during a budget hearing last month.
“Currently, we are dealing with about a 23% turnover rate, which has significant impacts on our clients that we represent, the length of the cases,” he told House Budget Committee members. “So we’re hoping that this will help that problem. The No. 1 cited reason when our attorneys leave is pay.”
For several years, the system suffered from long waiting lists, which spurred a successful lawsuit that put pressure on the legislators to fund more public defender positions in 2021.
Kehoe recommended $7.3 million for the pay raises, but Missouri House Budget Committee Chairman Dirk Deaton cut that amount in half in his recommendation for the marijuana money.
Crowell also asked to put a mitigation specialist, or a social worker that connects clients with resources, in each district office, which would mean 35 new positions. He told House members that it’s “the greatest thing that we’ve done as public defenders,” in his 18 years as a public defender.
Mitigation specialists help connect their clients with basic needs, he said, so they don’t violate probation and go back to jail.
“We didn’t have that resource until now,” he said. “It’s made a world of difference.”
However, the governor and Deaton have already recommended cutting that request down to 20 new positions — a nearly $800,000 budget decrease. Aside from helping clients, Crowell said these positions are much easier to fill than new attorney openings established as part of the lawsuit, which the office has never been able to fill.
Overall, his office is asking to use $25.6 million of the cannabis funds to increase pay, add social work positions and improve technology. Even if Crowell got everything his office asked for, there would still be more than $33 million sitting in the state treasury fund that his office can’t touch despite the fact that the money can’t be spent on anything else.
While Deaton cut the governor’s recommended funding for public defenders, he went the opposite direction for drug-addiction treatment and education programs.
Deaton has recommended spending $38.5 million on these programs, with $28.2 million going to the Missouri Department of Mental Health, $1.8 million for corrections, $4.7 million for the Department of Social Services and $3.8 million to the health department.
However, Kehoe has recommended $5.5 million less than Deaton — yet both would eliminate programs established in public schools and the state court system.
Several House members expressed concern about the move during a committee hearing last month. Republican state Rep. John Black of Marshfield said prevention and treatment for people with substance use disorders saves the state money.
“One estimate is that $1 spent on these programs ultimately saves the state $7 in terms of restoring people to productive society and preventing the disaster that a [substance use disorder] is,” Black said during the hearing.
The proposals from the governor and House budget committee cut a $500,000 grant for drug and DWI courts to support programs focused on medication-assisted treatment related to alcohol and opioid addiction. It also eliminates $300,000 for drug abuse resistance education in schools.
If the governor recommendations are approved, $27.6 million of cannabis funds available for these programs would be unspent.
The budget legislation would give the Missouri Veterans Commission the green light to spend the entire $40 million on continued support of the Veterans Homes Program, according to a commission spokeswoman.
That leaves no surplus in the veterans fund.
‘Need for additional resources’
When Missouri voters legalized adult-use marijuana in 2022, they approved using revenue from sales tax and fees — after operating expenses — to be divided evenly between three funds: for the state public defenders office, the Missouri Veterans Commission and the drug treatment programs through the Missouri Department of Health and Senior Services.
Budget officials estimate revenues will be $88.8 million in the upcoming fiscal year from July 1 to June 30, 2027.
According to the audit released last month, staff in Fitzpatrick’s office found the agencies “have communicated the need for additional resources, but the full amount of the funds available have not been appropriated in the approved budgets.”
Crowell said Deaton’s proposed 50% reduction in pay raises “will severely limit our ability” to compete with other state agencies that pay their attorneys more.
“Just for reference, the House just hired a new lawyer for around $74,000, and the Senate hired a new lawyer for $80,000,” Crowell said, and both of them were previously public defenders. “We cannot compete when these same attorneys make only $62,000 at MSPD. Our proposal and the governor’s recommendation would have allowed us to boost our starting pay to $75,000.”
A separate and ongoing concern, he said, is Deaton’s push to use the marijuana money to reduce the public defender’s core budget, and this year it’s by about $8 million.
Crowell believes voters didn’t intend for lawmakers to take away money meant for the public defenders’ operations now that they have marijuana revenue — pointing to the line in the constitution amendment that states all revenue from the taxes and fees of recreational marijuana sales, “shall provide new and additional funding…and shall not replace existing funding.”
Deaton’s argument is that the constitution refers to the public defender’s budget at the time the amendment was passed in 2022, not the current amount.
“Obviously, we do not agree with this interpretation,” Crowell said. “If tax revenue decreases, shifts or the constitution of Missouri is amended to remove these provisions, [the Missouri State Public Defender System] will be in a world of hurt.”
