Missouri’s Tough Road Ahead

On January 28, Missouri’s newly sworn-in governor Mike Kehoe delivered his State of the State address. His remarks were well within the normal limits. These speeches are often just a list of priorities, but they can be of some value, especially at the beginning of a term in office.

Kehoe committed to reducing Missouri’s income tax, which is welcome. Missouri needs to be more competitive with the states around us who are also working to attract families and businesses—including those already living and working in Missouri.

But he also introduced a budget larger than previous years, and detailed a number of places where he wanted to increase spending. Those increases included a number of items regarding public safety, such as $10 million for the Blue Shield Program, $2.5 million to support the sheriff’s retirement system, a new crime lab in Cape Girardeau, and boosting spending on the Blue Scholarship Program for law enforcement basic training.

Kehoe indicated he wanted $10 million to support childcare providers, $15 million in additional funding for career and technical centers in addition to $5 million more on an annual basis for their operational costs, $800,000 in funding for Future Farmers of America, and $55 million in new bonding for state fair facilities.

Regarding education, Kehoe indicated he wanted to spend $200 million more for the education foundation formula, $370 million to fully fund school transportation, $33 million for teachers’ salaries, and $30 million in grants for rural schools.

He also asked for an additional $10 million to be spent to support Veterans Homes.

The tab comes to $53.4 billion, $450 million more than the previous year. He did not mention any cuts to spending. But he did commit to ending the state’s income tax, “once and for all.”

All the programs the governor wants to support may be good and worthwhile. But it doesn’t take an experienced budget analyst to see the problem: one cannot continually increase spending while promising to zero-out an income stream that accounts for almost 60 percent of the state’s general revenue according to the state’s Office of Administration (see page 25).

Missouri’s financial position is all the more difficult because Kehoe’s predecessor, Mike Parson, spent money like a blue state progressive.

Reducing Missouri’s income tax to zero is necessary because of the economic benefits that will accrue. But if the effort is to be successful, Missouri needs to reduce spending. A lot.

I do not envy the incoming governor and those tasked with cutting spending—but there is no other way forward.