The first step toward finding a solution is admitting there’s a problem. It’s been obvious to anyone who’s been paying attention over the past half-decade that Missouri has a spending problem. The good news is that Governor Kehoe admitted as much when he signed the state’s budget bills before the start of the new fiscal year.
Longtime readers of the Show-Me Institute blog won’t be surprised by this admission, but hearing the governor finally acknowledge our state’s spending problem hopefully signals a coming course correction. This stands in stark contrast to Missouri’s lawmakers in recent years, who have largely ignored how out of control state government spending has become, despite all the data to the contrary.
Prior to state Fiscal Year (FY) 2026, which began on July 1, Governor Kehoe signed a $50.8 billion spending plan, which was about $2 billion less than what the general assembly sent him. It should be noted, and lauded, that the governor applied some fiscal sanity by vetoing more than 200 spending items. But it’s also important to keep perspective on our state’s current financial mess and how much work fixing it will require.
It’s easy to forget that as recently as FY 2019, Missouri’s government only spent a little more than $27 billion in total compared to the $50 billion for 2025. What’s changed? Missouri’s spending has exploded on almost everything: welfare, education, transportation—you name it, and spending on it probably increased.
In 2019, Missouri’s budget included a little more than $9 billion in general revenue funds (primarily state sales and income tax collections) and nearly $9.6 billion from the federal government. Today, our state plans to spend more than $15.6 billion in general revenue and $24.5 billion in federal funds. If you compare this to the state’s estimates for general revenue collections in the coming year of $15.3 billion, you can see that even after the governor’s vetoes, Missouri’s government is still expecting to spend $300 million more than it projects to bring in. That doesn’t even account for the high likelihood of supplemental funding requests later in the year, and that the state’s supply of federal funding is projected to fall by the billions.
Missouri taxpayers are stuck with a government spending far beyond its means. As recently as 2023, Missouri had nearly $8 billion in general revenue funds set aside that could have been saved for times of need, but instead the state has spent exorbitantly, whittling away at the surplus. Today, those excess funds have been almost entirely depleted. Governor Kehoe recently noted that without his actions to reduce spending, the state was expecting a billion-dollar shortfall going into the next fiscal year.
It’s hard to look at what’s happened with Missouri’s budget over the past five years and view it as anything but a squandered opportunity. Our elected officials managed to take historic tax revenue growth, unprecedented federal investment, and an $8 billion cash reserve and turn all that into a billion-dollar hole in the budget right as the state’s revenue forecasts are taking a turn for the worse. Going into next year, Missouri’s tax collections are projected to decline and there will be no more excess federal dollars to prop up the state’s unsustainable spending. It should go without saying that it is imperative that Missouri’s lawmakers finally get serious about getting the state’s finances back on track.
There’s no longer any dispute about whether Missouri’s finances are a problem. The better question is whether it’s too late to stop the bleeding. Perhaps the most important task for our state’s elected officials over the next year will be finding a solution that’s better than something akin to putting a Band-Aid on a bullet wound.
