“Missouri’s budget is broken.” That’s the conclusion of Missouri State Auditor Scott Fitzpatrick’s June report on the state’s fiscal outlook. While much of the report focuses on Missouri’s oft-discussed unsustainable spending trajectory, it also highlights a more fundamental problem with the state’s budget.
As I’ve written repeatedly, Missouri’s annual budget totals have been misleading in recent years. Lawmakers aren’t including a full 12 months of funding in their approved spending plans, leaving out significant known costs that will have to be paid through supplemental funding bills later in the year. To be clear, that doesn’t necessarily have to be a problem if there is enough money set aside to cover those eventual costs. Unfortunately, the auditor’s report suggests Missouri isn’t setting aside enough.
Over the past six years, the state’s supplemental funding needs have averaged about $371 million. This year, however, the state has set aside just $100 million. The issue isn’t that every supplemental request will necessarily reach the historical average. It’s that lawmakers have repeatedly budgeted far less than the state ultimately needs, despite several years of evidence that this pattern is likely to continue. So far, the state has been able to cover the difference because sufficient surplus revenues have been available.
This issue has parallels with Missouri’s recent reliance on one-time funding. Both practices allow lawmakers to put off difficult choices about how to cover the spending commitments of the years ahead. When Gov. Kehoe signed the fiscal year 2027 budget into law shortly before July 1, he vetoed and restricted millions in spending approved by the general assembly. As I wrote last month, the governor also warned about relying on one-time funding for ongoing expenses. The auditor provides a concrete example of this problem, noting that the budget uses nearly $200 million from the Capital Preservation Fund and Blind Pension Fund for ongoing purposes, even though lawmakers know those fund balances will not recur.
Missouri’s budget has nearly doubled since 2019. The auditor projects Missouri will spend around $1.7 billion more in general revenue this year than it expects to collect, while facing hundreds of millions of dollars in additional mandatory spending increases in fiscal year 2028 and beyond.
That’s a dramatic change from just a few years ago, when Missouri’s fiscal outlook was much different. The state had more than $5 billion in surplus funds, an historic influx of federal money, and an opportunity to prepare before more normal fiscal times returned. Instead, I think it’s fair to say that the opportunity to proactively right Missouri’s fiscal ship has been squandered. The surplus will be exhausted by next year, and the need for tough decisions could arrive as soon as January, when the supplemental funding requests come in.
After three years of seeing this pattern play out, it’s clear that our elected officials should stop treating the gap between the budget and actual spending as a surprise. Fixing what’s broken with Missouri’s budget may not be easy, but providing an honest accounting of what government costs should be.
