Budget director details ARPA spending, pay‑plan and warehouse consolidation during House Bill 20 briefing

State budget director Dan Hogg told the House Budget Committee on March 12 that Missouri received roughly $2.6 billion in federal ARPA (American Rescue Plan Act) funds and must obligate those funds by the end of calendar year 2026. The director said roughly $1.2 billion has been spent so far and that the remaining money is locked to statutorily‑allowed ARPA purposes.

Hogg said the FY26 House Bill 20 materials include many line‑by‑line adjustments reflecting projects that have been partially spent or cancelled. "We got about $2,700,000,000. We have spent about $1,238,000,000," he said, putting current expenditure at roughly 46 percent of total ARPA receipts.

Why it matters: ARPA dollars are time‑limited and subject to federal rules. Hogg told the committee those constraints prevent moving money freely between projects; unspent balances must be obligated by the federal deadline or returned. To avoid returning unobligated balances, the FY26 budget includes a $150 million appropriation to the education foundation formula as a “safety valve” that would preserve general revenue only if unobligated ARPA funds remained.

Key details and changes - Foundation‑formula “safety valve”: Hogg described a $150 million line placed in the formula so that any leftover ARPA authority could be applied to the formula rather than returned to the federal government. He emphasized the fund was included to avoid sending money back, and said, "That is purely a safety valve. So that is not an additional $150,000,000 to the formula." The director said at present it did not look likely that significant ARPA dollars would flow to the formula but the line was retained in case projects closed under budget.

- Lapses and line reductions: Hogg identified roughly $12,000,000 in specific lapses (projects where authority exceeds expected expenditures). Examples he gave during the hearing included a $5,000,000 international flight incentive that will not be spent and a Cape Girardeau Career & Technical Center allocation that the department reported would be returned or left unspent. He said career centers would lapse about $400,000 in one line.

- IT and digital projects: Hogg said a number of major IT modernization projects were funded with ARPA startup dollars. He described moving staff off state funds onto ARPA while those projects advanced and then moving many of those positions back to state funding as the ARPA‑funded work completed. He said roughly 43 staff would move back to state payrolls this year and estimated the initial digital modernization startup cost at about $120 million. He warned that ongoing subscription and maintenance costs will be a future general‑revenue ask.

- Warehouses, PPE and fleet consolidation: Committee members pressed Hogg and Office of Administration witnesses about consolidating leased warehouse space in Cole County. Hogg and OA staff said the state purchased the Scruggs facility (about 251,000 square feet) and an adjacent manufacturing warehouse and has been remodeling both to centralize stock and reduce annual lease payments. They said moving away from multiple leased warehouses will save money over time but requires a small increase in state staff to manage the consolidated warehouse and fleet garage; the budget includes FTE requests for those operations. OA described planned improvements — shelving, security, parking and a “pad‑ready” site for a future fleet garage — and said one more warehouse acquisition remains a future ask.

Committee concerns and follow‑ups Committee members repeatedly asked for more line‑level reconciliation documents showing which ARPA lines remain obligated, which have been spent down and which are expected to lapse. Several members asked for the precise current balances and an updated spreadsheet of ARPA authority and expenditures; Hogg said staff would provide reconciled numbers and back‑up reports that line up agency reserves and expenditure pulls.

Members also questioned the long‑term carry costs for projects whose ARPA startup funding will require ongoing state support when federal money is gone. Hogg and others said most ARPA investments were chosen as one‑time capital projects to reduce future state operating obligations, but acknowledged ongoing maintenance or subscription costs for IT and other projects will become a state budget issue in later fiscal years.

What the committee directed: Several members pressed for more specific reconciliations and for lists of ARPA projects that are now considered lapsed, and Hogg agreed to supply the committee with the updated reconciled spreadsheet and backing reports.

Ending note The HB20 ARPA briefing framed the immediate budget work for the committee: reconcile which projects still need authority, track lapses so the state does not inadvertently forfeit federal funds, and plan for the operating carry‑costs that will follow one‑time ARPA investments.