Just how broken is Missouri’s budget? Last week, Missouri’s House of Representatives finished work on its nearly $51 billion version of the state’s budget—and some lawmakers claimed this budget was a sign of fiscal restraint.
To be fair, if the House budget becomes law, it will be Missouri’s first budget in more than a decade that is smaller than the previous year’s budget. Not only is the House budget smaller than last year’s, it’s also approximately $2 billion smaller than what Governor Parson recommended for next year, which represents a small step in the right direction.
It should be noted that the budget process will now move to the Missouri Senate—the chamber more accepting of higher spending in recent years. It’s therefore still too early to tell if the state’s streak of record-breaking budgets is coming to an end.
The recent budget negotiations in Jefferson City also served as a reminder of how much things have changed for Missouri financially over the past several years.
- Missouri’s total budget has nearly doubled since Fiscal Year (FY) 2019, growing from a little more than $27 billion to $53 billion this year (FY 2024).
- General Revenues (mostly state income and sales tax collections) have increased by significantly less, going from approximately $10 billion to more than $13 billion over the same period.
- The biggest driver of budget growth has been the temporary influx of federal funds associated with the federal COVID-19 pandemic relief and infrastructure packages.
- The federal share of Missouri’s budget has grown from around 30% to closer to 50%.
- While Missouri (much like the rest of the country) has dealt with record-breaking inflation in recent years, state spending growth has outstripped the increase in prices, and has even grown faster than the state’s population and economy.
- Going into next year, the state will lose access to the billions of temporary federal dollars, all while state general revenues are expected to remain relatively flat or decline.
Keep in mind that the extraordinary state spending growth in recent years occurred even though Missouri’s constitution includes a balanced budget requirement—the requirement does not apply to federal funds.
There are myriad reasons to think the road ahead will be a tough one, and cutting spending will be a mandatory part of the equation. That’s why I’m happy lawmakers in the House took the measures they did to start turning the tide on state spending, even though I wish they’d gone further. I’m also looking forward to the Senate debating its spending plan in the coming weeks, with the hopes that members of the Senate also share the House’s view that spending should be reined in.
But with so many important spending decisions left to be made, and such dark clouds ahead in Missouri’s financial future, state taxpayers should join me in waiting until the budget makes it across the finish line before considering whether to celebrate any savings.
