To borrow from Yogi Berra, it is déjà vu all over again. For the past two years, I have warned that Missouri’s budget totals are likely misleading. Lawmakers are routinely approving spending plans that appear smaller than they really are.
When Governor Kehoe signed the FY 2026 budget into law last June, after vetoing more than $2 billion in spending approved by the legislature, the total came to nearly $51 billion, with $15.4 billion coming from state general revenues. Given that Missouri’s budget totaled barely $27 billion less than a decade ago, it may seem hard to believe that a $51 billion budget could still understate the cost of state government. Nevertheless, the budget left out more than $1 billion in anticipated Medicaid spending.
This is not a matter of miscounting or bad estimates. While projecting costs more than a year in advance is never perfect, what is happening here is more straightforward. State lawmakers are knowingly approving budgets that do not include enough funding to last the full fiscal year. Missouri’s budget director acknowledged as much when he testified before the House Budget Committee this past week.
Although the issue likely extends beyond Medicaid, the program provides the clearest illustration of the problem. For the vast majority of enrollees, Medicaid costs the state a predictable monthly payment to a managed care provider (essentially a health insurance company). Enrollment today is roughly the same as it was one year ago. Yet the supplemental funding request for FY 2026—the amount needed to carry the budget through June 30—exceeds $3.2 billion, with more than $1 billion devoted to Medicaid alone. That increase far outpaces any reasonable measure of inflation and reflects a budget that did not include a full year of known costs.
This is not a new pattern. When I wrote about Missouri’s budget mirage last year, the legislature was facing a nearly $2 billion supplemental request, with Medicaid again serving as a significant driver. In practical terms, the $51 billion budget approved last year is now expected to end closer to $54 billion in total spending. With the governor’s FY 2027 budget recommendations totaling $54.5 billion, including $16.3 billion from general revenue, taxpayers are left to wonder how closely that figure will track reality.
Much has been said about the need to rein in Missouri’s out-of-control spending. But a necessary first step in rightsizing state government is being clear about how much it costs in the first place. Systematically underfunding known obligations and backfilling them later makes it difficult for taxpayers to understand the true size of the budget and the choices policymakers are making. Perhaps more importantly, an understated baseline makes it harder for lawmakers to evaluate new spending proposals or identify meaningful savings because they aren’t aware of the true cost of their existing commitments.
As legislators begin work on next year’s budget, the best place for them to start is with transparency.
