Neglecting a problem doesn’t make it go away, or cheaper to fix. Missouri is learning that lesson with regard to its IT systems right now.

As I’ve written before, many of Missouri’s government computer systems are critically out of date. COVID relief funds helped jumpstart long-needed modernization efforts, but the passage of the One Big Beautiful Bill last July means new federal requirements will soon depend on those upgrades.

Missouri’s Department of Social Services (DSS) has been tasked with integrating its Supplemental Nutrition Assistance Program (SNAP) and Medicaid eligibility systems while preparing for new community engagement requirements. This integration has been needed for years, but the new federal rules make it urgent. The goal is straightforward: simplify how benefits are administered while reducing costly errors. If Missouri cannot bring those error rates down, the state will be responsible for a larger share of program costs.

Some officials have warned that meeting the new requirements could force the department to shift resources away from other modernization work. There is no doubt funding plays a role. Modernizing large government IT systems can be expensive. But in this case, stronger systems are exactly what will make complying with new federal mandates possible.

There are reasons to worry about how this effort will go. This is not the first time DSS has faced a difficult administrative task, and the last major one did not go smoothly. When federal pandemic rules suspended Medicaid eligibility reviews, states had time to prepare for the return of normal operations. Missouri did not use that window to get ahead or fully modernize its systems. When eligibility reviews resumed and the state had to reassess hundreds of thousands of enrollees, Missouri struggled immensely.

More recently, Missouri’s experience with large IT modernization efforts across state government offers another warning. Lawmakers were told a few weeks ago that completing upgrades to the state’s financial management system will cost more than $250 million. This is a project that is already significantly behind schedule and over budget. It should be noted that Missouri’s difficulty with modernization is partly the result of how long these systems were allowed to fall behind. It‘s not surprising that the longer upgrades are delayed, the harder and more expensive they become.

The challenge Missouri faces now is that many of the policies it must implement depend on the very systems still awaiting modernization. Community engagement requirements require technology capable of tracking employment data. More frequent eligibility renewals require information that can move accurately between programs. Lower error rates require systems that can catch mistakes before they turn into federal penalties.

As lawmakers finalize Missouri’s budget in the weeks ahead, this issue should remain front of mind. Modernizing the systems that run the state’s safety net is not a project the state can afford to ignore any longer.

There’s no getting around the fact that Missouri will ultimately have to upgrade these systems. The only real question now is whether the state does it in time to avoid more costly mistakes and federal penalties.

The post Cost of Delaying Safety-Net Modernization appeared first on Show-Me Institute.

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.

The post The Budget Mirage Reappears appeared first on Show-Me Institute.

Missouri’s primary tax and expenditure limit, commonly referred to as the Hancock Amendment, is no longer providing an effective check on government growth.

The Solution

Improve and expand the taxpayer protections provided by the Hancock Amendment by adopting a Taxpayer Bill of Rights.

Key Facts

• On paper, Missouri’s Hancock Amendment promises to keep state government from growing faster than Missourians’ pocketbooks, but it has proven incapable of doing so in recent years.
• A Missouri Taxpayer Bill of Rights could build on the legacy of the Hancock Amendment to provide the strongest protection against unconstrained government growth in the country.
• A Taxpayer Bill of Rights would keep the state’s revenues and expenditures from growing faster than the sum of the inflation rate and population growth, ensuring government cannot grow in scope without voter input.
• Unlike the Hancock Amendment, which grew out of date and has failed to provide taxpayer refunds for the past 26 years, a Taxpayer Bill of Rights would guarantee tax cuts or refunds if revenues ever exceed the defined limit.
• Although the Hancock Amendment requires property tax rates be rolled back when property values increase too quickly, this requirement is not being applied to the personal property taxes paid on the value of items such as cars, boats, and farm equipment.

Hancock Protections No Longer Effective

In 1980, and then again in 1996, Missouri voters approved amendments (the original amendment is commonly referred to as the Hancock Amendment) to the state’s constitution that were intended to place important restrictions on the government’s ability to raise and spend tax dollars. But in the more than 40 years since its initial passage, serious weaknesses in the amendment’s restrictions have been exposed.

One of the amendment’s main selling points—a state revenue limit with a tax-refund provision—was intended to prevent government from growing too fast. If revenues exceeded the limit, state taxpayers would receive a refund of the difference. The problem is that policymakers and an out-of-date compliance formula have rendered the tax refund threshold nonfunctional, resulting in state taxpayers not receiving a refund in more than 20 years. In fact, without reform, it’s unlikely that the Hancock Amendment’s tax refund provision will ever be triggered again.

A New Standard for Tax and Expenditure Limits

Missouri needs stronger, more resilient taxpayer protections. Missourians should be assured of the following principles:

1. When tax revenues grow faster than the sum of inflation and population growth, taxpayers will get an automatic tax cut or refund unless they explicitly approve using the money for spending.
2. Comprehensive state spending—including on tax credits—cannot grow faster than inflation plus population growth without voter approval.
3. When property values increase faster than inflation, tax rates will be automatically reduced to ensure taxes aren’t raised without voter approval.
4. When lawmakers want to substantially raise, change, or extend taxes, there will always be a transparent process for voter approval.

A Missouri Taxpayer Bill of Rights would accomplish each of these goals. Additionally, it would move our state to the front of the national pack for fiscal stewardship by providing Missourians the strongest tax and expenditure limit in the country. The Missouri Taxpayer Bill of Rights is designed to stand the test of time and contains strong enough definitions to avoid the political gamesmanship that has plagued the Hancock Amendment for decades.

The Missouri Taxpayer Bill of Rights would also extend the property tax rate rollback requirements to the two property taxes—the personal property tax and the commercial surcharge—that the Hancock Amendment currently exempts (three if you count the general exemption from this requirement for all property taxes levied by the Kansas City 33 School District). Perhaps this is because people assumed used car values would always decrease, which they did until 2021 and 2022. The windfalls local governments started receiving in 2022 from increased used-car valuations should be addressed, and rate rollbacks should be required for personal property as they are for real property.

Hancock Amendment Revenue Limit vs. Limits from a Taxpayer Bill of Rights

Missouri is currently more than $4.9 billion below the Hancock-established revenue ceiling.

Policy Recommendations

• Adopt a Taxpayer Bill of Rights that stands the test of time and more effectively realizes the spirit of the Hancock Amendment through robust limits on state spending and revenues.
• Ensure that government cannot grow in scope without voter input, and if revenues exceed the defined limit, taxpayers receive automatic tax cuts or refunds.
• Expand the Hancock Amendment’s property tax rate rollback provisions to include personal property taxes and the commercial surcharge.
• Guard against runaway inflation by protecting taxpayers from drastic property assessment increases.

The post Taxpayer Bill of Rights appeared first on Show-Me Institute.

Missouri’s budget is growing faster than the state’s economy, and if this troubling trend continues it could soon prove disastrous for state taxpayers.

The Solution

Limit spending growth, increase accountability, and improve budget resilience through reforms that prioritize Missouri’s long-term financial health.

Key Facts

• Missouri’s government is growing faster than inflation, wages, and the state’s population.

• Currently, state budgeting practices actually encourage greater spending.

• Most state budget documents aren’t easy for citizens to find, nor are they available in a form that is easy to use.

• Missouri awards nearly $1 billion each year in tax credits, which are the fiscal equivalent of state spending, completely outside of the normal budgeting process.

• According to Moody’s Analytics, Missouri is one of the least-prepared states in the nation for an economic downturn.

Spending at Record Levels

Missouri’s budget has been growing unsustainably for years, and may finally be reaching a fiscal cliff. After a year when a reduction in spending was promised but not delivered, our state is facing a one-billion-dollar shortfall. Missouri’s Hancock Amendment, which was once thought to provide protections against unchecked government growth, has proved incapable of meaningfully constraining spending. In fact, if Missouri’s budget growth hadn’t drastically outstripped both inflation and population growth over the past five years, the current fiscal crisis could have been avoided entirely.

Current Practices Encourage More and More Spending

Missouri currently uses what is called an “incremental” approach to budgeting, which means that budget items from one year automatically roll over into the next and establish the new baseline for state spending. This practice makes budgeting easier for legislators because it allows them to focus attention on new funding requests, but it also allows many old programs and spending items to escape annual scrutiny. The result is snowballing government growth. Missouri should require legislators to evaluate program effectiveness through performance audits and to regularly use “zero-based budgeting,” meaning that lawmakers must build the state’s budget from square one each year.

You Can’t Fix What You Can’t See

Currently, most state budget documents are difficult to find, hard to interpret, and in a form that requires citizens to manually transcribe the data to be studied. Such hurdles mean that lawmakers and state bureaucrats can act with greater impunity and less oversight. There is no good reason why the documents that detail where taxpayer money is going should not be easy for any citizen to access and understand.

Additionally, Missouri leads much of the nation in the subsidization of private entities with state tax dollars, yet there’s little to no mention of these subsidies in the yearly budget. Last year, Missouri awarded nearly $1 billion in various tax-credit programs with little to show for it. These tax credits are the fiscal equivalent of state expenditures, but because the state forgoes revenue instead of spending it, the credits are allocated completely outside the state’s normal budgeting process. The exclusion of tax credits from yearly scrutiny also removes them from the calculations lawmakers must make when tasked with balancing the state’s budget. A truthful accounting of all tax obligations is required if Missouri is to right its fiscal ship.

Missouri Isn’t Ready for the Next Recession

The boom-bust cycles of state finances create budgetary chaos. Each economic downturn forces elected officials to make difficult spending decisions that can be at odds with the state’s long-term funding priorities. As a result of the 2007-2009 Great Recession, general revenues fell by over $1.2 billion, leading to abrupt cuts in education, corrections, and other spending that lasted for several years after the recession. Almost every other state in the country has a rainy-day fund to help weather these situations, but Missouri’s Budget Reserve Fund is too small and too hamstrung by restrictions to be used in a downturn. In fact, it’s never once been used for this purpose.

Policy Recommendations

• Establish clear and meaningful state program performance metrics that allow for objective assessments.

• Implement zero-based budgeting.

• Make all state budget documents available in easily accessible, machine-readable formats (e.g., in Excel or CSV format).

• Include all tax credits, or tax expenditures, in the state’s yearly budgeting process.

• Create a separate budget stabilization fund with the sole task of stabilizing revenues in the event of an economic downturn. The fund should be large enough to fully replace state revenues during a crisis comparable in magnitude to the Great Recession with strong protections against improper use. Repayment to the fund also should be dependent on the pace of economic recovery.

FY 2026 Operating Budget

With approximately 58% of all state spending devoted to education and healthcare, continued budgetary growth puts enormous pressure on every other state spending priority.

Budgetary Growth: Fy 2016-2025

Missouri’s state spending has grown by more than 58% over the past decade.

The post Budgetary Reform appeared first on Show-Me Institute.

Local governments often hide documents and spending records from the taxpaying public despite requirements under the Sunshine Law that mandate meaningful transparency.

The Solution

Require that local governments report spending information.

Key Facts

• Missouri already has two programs through which local governments may report their spending to facilitate oversight by the public, but thus far only 33 counties and six municipalities are sharing information.

• One of the few ways for many taxpayers to obtain detailed information about their government’s expenditures is through the submission of a Sunshine Law request, but this system is fraught with government roadblocks and weak consequences for statutory violations.

A Checkbook for Missouri

The creation of the Show-Me Checkbook by the state treasurer’s office in 2018 and the passage of House Bill 271 in 2021 established voluntary reporting programs in the state for local governments. Yet those developments should be the beginning, not the end, of transparency and accountability for local government in Missouri. Local governing bodies should be required, not invited, to report their spending.

Accountability Pays Dividends

Online transparency portals ensure that rather than responding to Sunshine Law requests for these data, local governments can simply refer requestors to the continuously updating online resource. At the same time, taxpayers will be able to see in an understandable format where their money is going, and they will be able to keep tabs on the activities of elected leaders and bureaucrats when they choose.

Empowering the Auditors

Missouri adopted House Bill 2111 in the 2024 legislative session to increase the authority of the state auditor to investigate reports of malfeasance in local government. This positive change has improved accountability in local government by giving the state auditor the ability to audit local governments without a formal request or a petition drive in cases where financial irregularities are suspected.

Next, the state should consider adopting requirements and standards for local county auditors in Missouri’s larger counties (charter, first, and second-class counties). The quality of local auditing varies dramatically, from good in St. Charles County to basically nonexistent in St. Louis County.

Unfortunately, in 2025 the courts overturned a law imposing stricter reporting standards for municipalities within St. Louis County on the grounds that it was a “special law” applying only within St. Louis County. The legislature should address that issue by making higher reporting standards applicable to municipalities in every Missouri county.

The use of tax dollars to advocate for or against local government ballot issues has received significant attention this year. The time is right for the legislature to restrict or even eliminate the ability of local governments to use tax dollars to share information on ballot issues with voters. Attempts by local governments to be “neutral” generally make a mockery of the idea of neutrality and should be curtailed.

Policy Recommendations

• Make the reporting of local government spending data to the Show-Me Checkbook and the Missouri Accountability Portal database mandatory rather than voluntary.

• Expand the now-overturned financial reporting requirements in RSMO §67.287 for municipalities in St. Louis County to all municipalities statewide.

• Ban the use of tax dollars by local governments to share information on local ballot issues.

The post Local Government Transparency appeared first on Show-Me Institute.

As many Missouri businesses struggle to find workers, the state’s welfare programs are fostering government dependency.

The Solution

Seize the opportunity provided by the recent passage of the One Big Beautiful Bill Act to reform Missouri’s welfare programs.

Key Facts

• Recent passage of the One Big Beautiful Bill Act (OBBB) offers Missouri new opportunities to reform the state’s welfare programs.
• More than 1 in 5 Missourians are enrolled in government-sponsored health coverage through Medicaid.
• Estimates suggest that upwards of 20% of welfare enrollees may actually be ineligible to receive services.
• Missouri should take advantage of the new flexibility granted to states as the many provisions of the OBBB are implemented in the coming years, focusing on encouraging work and making the programs more efficient.

New Opportunities

After decades of creeping growth in government dependence, Missouri now has a golden opportunity to finally enact meaningful welfare reform. Following the recent federal passage of the One Big Beautiful Bill Act (OBBB), states will be tasked over the next several years with implementing the bill’s many provisions that relate to welfare programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

Drastically changing Missouri’s welfare programs will require significant, much-needed computer system upgrades. According to a recent report from the Missouri State Auditor’s Office, the state’s Medicaid agency continues to struggle with determining recipient eligibility. As a result, individuals who are ineligible to receive benefits have remained enrolled in the program for up to 10 years in some cases. State taxpayers have also been footing the bill for benefits for dead recipients due to a lack of sufficient system controls.

As Missouri is upgrading the state’s information systems as required by the OBBB, there’s no better time to address the existing eligibility system issues and take the extra step to further reform the state’s welfare programs to make them work better for program recipients and taxpayers alike.

Continuing Growth

As government spending has grown in recent years, so too has enrollment in Missouri’s various welfare programs. Today, Medicaid is Missouri’s largest government-run program, with more than 1.2 million Missourians—approximately one fifth of Missouri’s population—enrolled. This total represents an increase in enrollment of approximately 50% since the beginning of 2020. Medicaid is not the only program growing in size. Approximately 660,000 Missourians are enrolled in SNAP, otherwise known as food stamps. Estimates suggest that upwards of 20% of all welfare enrollees may not be legally eligible to receive services or are receiving benefits in excess of the amount to which they’re entitled.

Change Incentives to Change Outcomes

Welfare programs shouldn’t encourage dependency, but far too often they end up trapping recipients on government support. After years without enforcing the SNAP or Temporary Assistance to Needy Families (TANF) work requirements, the OBBB requires Missouri to implement “community engagement requirements” for able-bodied SNAP and Medicaid recipients starting in 2027. Missouri should ensure these new requirements are more than just a new bureaucratic hurdle recipients need to clear and are instead offering those who need temporary assistance a clear path back to the workforce.

Welfare Program Enrollment

Following the surge in program enrollment during the COVID-19 pandemic, more than 1.2 million Missourians remain enrolled in Medicaid and more than 660,000 are on SNAP (food stamps).

Reform Can’t Wait

Whether Missouri’s government is ready or not, as a result of the OBBB, substantial changes are coming to the Show-Me State’s welfare programs over the next several years. While many of the bill’s reforms focus on improving program integrity and establish new state requirements with firm deadlines for compliance, some reforms provide states considerable flexibility in how they’re implemented. In these cases, Missouri should take advantage of this newfound flexibility to tailor the reforms to best meet the needs of Missourians, with a focus on maximizing efficiency, minimizing waste, and encouraging work for recipients who are capable.

Policy Recommendations

• Take advantage of newly provided flexibility to meaningfully reform welfare programs in a manner consistent with the goals of the recently passed OBBB.
• Continue upgrading state information systems to encourage greater accountability by minimizing waste, fraud, and abuse.
• Dutifully implement provisions of the OBBB to maximize program integrity while ensuring that productive work is encouraged.

The post Welfare Reform appeared first on Show-Me Institute.

Missouri’s government continues to grow in both size and scope while tax revenues are expected to stagnate in the coming years.

The Solution

Complete a comprehensive review of Missouri’s government to rein in unnecessary spending and regulation.

Key Facts

• Missouri’s net general revenue collections for Fiscal Year 2025 were essentially flat and are expected to be similar in Fiscal Year 2026.
• Missouri’s spending of state revenue sources has increased by more than 75% over the past five years, and is expected to outpace tax revenue growth in the next few years.
• Successful state-based efficiency efforts have been enacted across the country over the past 50 years and have saved taxpayers billions of dollars.

Something’s Gotta Give

Missouri’s tax revenue collections have grown at an average rate of nearly 9% over the past five years, but state spending has grown at an even faster rate of more than 10%. To make matters worse, Missouri’s official estimates now project state revenues to remain essentially flat in the coming years. Given that the cost of providing the same level of services increases over time, and that Missouri’s constitution has a balanced-budget requirement, it should be obvious that this troubling trend cannot continue.

Learn from Other States’ Experiences

Nearly 60 years ago, then-California Governor Ronald Reagan established what was perhaps the most successful state-based cost-cutting initiative in history with an executive order. The “Governor’s Survey on Efficiency and Cost Control” enlisted the help of more than 200 private-sector leaders to recommend, in short order, more than 2,000 reforms to improve California’s government operations and reduce costs. All told, the recommendations included savings of upwards of $4.2 billion in today’s dollars.

Over the past year, following the lead of Reagan and the recent work conducted by the federal Department of Government Efficiency, more than 20 states have established their own cost-cutting initiatives. While Missouri’s general assembly created committees last year on the subject, no visible progress has been made on establishing a government efficiency program. Instead of trying to reinvent the wheel, Missouri can look to states that have already achieved success reining in government and take similar actions that could save billions of Missouri taxpayer dollars.

Step One of Many

Rightsizing Missouri’s government will not be easy. It will require leadership from both the executive and legislative branches of Missouri’s government, a clear plan of attack for identifying inefficiencies, and a commitment to exercising fiscal restraint over several years while implementing the reforms necessary to permanently change the state’s fiscal trajectory. This much is clear: There is no longer time to delay. Missouri’s elected officials must start reducing government spending today if there’s any hope of securing our state’s financial future tomorrow.

Policy Recommendations

• Establish an executive branch-led government efficiency initiative to provide a comprehensive review of Missouri’s government practices.
• Enlist the help of private-sector leaders to help review government, rein in excess spending, and recommend reforms to improve efficiency while reducing waste.
• Set clear goals and timelines for the initiative, with commitment from elected officials to make the efficiency recommendations a reality.

The post Office of Government Efficiency appeared first on Show-Me Institute.

For Missouri, perhaps the biggest change will be the cost of SNAP going up. Unlike Medicaid, the federal government has historically paid for 100% of the SNAP benefit, with states only on the hook for 50% of its administrative costs. The OBBB increases the share of administrative costs borne by states to 75%, and has the potential to start charging states for some program benefit costs as well.

There’s a noticeable focus in the OBBB on improving program integrity in America’s welfare programs. With Medicaid, the focus was on checking program recipients’ eligibility more frequently. For SNAP, the focus is on reducing state payment error rates. Last year, the national rate of overpayment for SNAP (awarding benefits to people who don’t qualify or offering more benefits than the recipient was eligible for) approached 10%, with Missouri not much behind at 8.16%. Perhaps the most surprising thing about the payment errors is that they’re almost entirely overpayments. The error rate for underpayments barely exceeds 1%.

To be clear, there could be myriad reasons for the errors, but it shouldn’t be controversial to say that the government needs to do better. One possible explanation is that states tend toward overpayments because they aren’t responsible for the cost. The OBBB tries to address this misaligned incentive by requiring states to get their error rates below 6% by 2028; states that fail to meet this goal will need to start paying for a portion of the cost, with the share scaling by how far away the state is from the 6% goal.

All told, the SNAP changes contained in the OBBB could have a greater impact on Missouri’s budget than the changes to Medicaid. According to the Tax Foundation, these new costs could reach up to $400 million per year for Missouri if the state isn’t able to sufficiently reduce its payment error rate. It’s important to remember that the only guaranteed increase in cost for states is the higher share required for administrative services. If Missouri can find efficiencies in how it administers the program, the state’s cost might not need to go up much at all.

In the coming weeks, I’ll explain more about the OBBB’s changes to SNAP (no, these aren’t all of them), but these are the two that could have the largest impact on Missouri’s budget. Now that the federal government has finally gotten around to tackling the many broken incentives in America’s welfare system, it’s time for Missouri to step up and follow through on enacting comprehensive reform.

The post SNAP Back to Reality appeared first on Show-Me Institute.

Missouri taxpayers don’t have to look too far to find an example of the last time so-called budgetary savings were illusory—we can look at this year’s budget. When the FY 2025 budget was passed last May, our state’s elected officials celebrated their “conservative” budget. They said it was the first budget in a decade that was smaller than the previous year’s, which I noted at the time didn’t amount to much. It was true that the budget they initially passed did call for less spending than years prior, but in the months since, we’ve discovered that claims of budget cutting didn’t hold up.

When the budget passed last May, I explained that the totals were likely misleading, and the general assembly’s recent approval of a supplemental funding bill all but confirms it. To finish out the year, Missouri’s government needs nearly $2 billion extra dollars, with almost $400 million of that total coming from general revenue (state income and sales tax dollars).

As the above table shows, once you take into account all the funds that are truly needed for the year, this year’s budget exceeds last year’s by more than $700 million. What’s worse is that the general revenue portion is similarly higher than last year. This is problematic because not only is Missouri on track to spend more than the state projects to bring in (which was the case even before this extra spending was added), revenue collections are now behind where they were one year ago.

In other words, Missouri is in worse fiscal shape today than it was last year, and despite efforts to make it seem as though spending was being reined in, we’re once again on a path to spend more this year than ever before. As Missouri’s Senate begins its work on the state’s FY 2026 budget, it should be clear that taking real steps to rightsize state government is essential. Taxpayers should keep a close eye on the budget negotiations in the coming weeks. Legislators may try to sell Missourians on a bill of goods again.

The post Beware the Budget Mirage appeared first on Show-Me Institute.

-An update on where we are in the legislative session
-The literacy crisis in Missouri’s schools
-The problems with healthcare access in Missouri
-Slow and steady progress on education reform
-Why we need to cut spending
-People want local government to handle the basics

Click here to find the newsletter.

The post Show-Me Institute’s March 2025 Newsletter appeared first on Show-Me Institute.

So here is my contribution to the effort. Just tell St. Louis’s Bi-State Development Agency (also known as Metro) “no” on its application for around $700 million in federal funds for the ludicrous Green Line (formerly known as the North-South Line) proposal. Like Nancy Reagan said to Arnold on Diff’rent Strokes, “Just say no.”

The new leadership in the federal Department of Transportation (DOT) has instituted major changes in how the DOT is going to make decisions. This doesn’t look good for the Green Line, as the St. Louis Business Journal wrote about this week. The new DOT guidelines state that, among many other things, the DOT isn’t funding projects for local political purposes or social justice reasons. The new DOT leadership is focused on moving people and goods, and actually moving people is one thing the Green Line isn’t going to do. Metro’s own estimates—which based on history are probably inflated—claim that the Green Line will have only 5,000 boardings (so, about 2,500 people) per day. That is for a billion-dollar project. That’s absurd.

Whether you call it the “Green Line” or the “North-South Route,” I call it an inevitable failure and a huge waste of tax dollars. Even if you support MetroLink, there is no reasonable argument for the Green Line project. The federal government ought to reject this plan and many other similar, though not quite as bad, applications from around the country.

You’re welcome, Elon.

The post Hey Elon, Here Are Some Cost Savings for You in St. Louis . . . appeared first on Show-Me Institute.

While the governor’s announcement didn’t precisely outline what he had in mind for Show-Me DOGE (department of government efficiency) or the timeline for implementing it, there’s reason to believe such an endeavor would be worthwhile for Missouri. Given the numerous examples of waste found by the federal DOGE effort thus far, and the fact that Missouri’s budget has nearly doubled in the past five years, it’s likely that a closer look at our state finances would be able to uncover significant savings.

Last month, my colleague Aaron Hedlund and I published a guide for establishing a Missouri Office of Government Efficiency (MOGE). Our guide explained Missouri’s recent runaway spending growth, discussed the benefits of the executive branch leading the charge of finding inefficiencies and cost savings, and outlined key principles that would increase the likelihood of success for any DOGE-type effort.

The ideas from our guide were informed by the work of then-California Governor Ronald Reagan back in 1967 that used private funding and non-government experts to provide an unbiased outside perspective on California’s government. All told, Reagan’s effort was able to find more than 2,000 areas for reform in short order, and if all were implemented, would have saved taxpayers more than $500 million, which adjusted for inflation would amount to about $4.2 billion today. Unfortunately, only about half of Reagan’s recommendations were ultimately implemented.

Reagan’s experience makes it clear that buy-in from both the legislative and executive branches of Missouri’s government will be necessary for success. The good news is that both chambers of Missouri’s general assembly have already established their own committees on government efficiency and have begun working diligently.

It’s long past time for a serious effort in Jefferson City to rein in the state government’s excess, and it’s great news that so many of our elected officials have stated their interest in taking up the task. Missouri’s general assembly has already started its work. Now it’s the governor’s turn to follow suit and seize the opportunity to rightsize our state’s government.

The post Where’s Show-Me DOGE? appeared first on Show-Me Institute.

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.

The post Missouri’s Tough Road Ahead appeared first on Show-Me Institute.

In part two of this series, I briefly mentioned that in Missouri’s recent period of overwhelming Medicaid growth, the only eligibility category that had a reduction in enrollment is people with disabilities. Today, there are approximately 125,000 disabled Missourians enrolled in the Medicaid program, which is down 50,000 since its peak in 2023, down 25,000 since 2019, and is actually lower than at any point in the past 20 years (which is as far back as the data goes).

What could possibly explain this sudden shift? One explanation, as I referenced in part one, is that Missouri is still catching up on processing thousands of program eligibility redeterminations that were paused for several years during COVID-19. But the problem with that theory is that you wouldn’t expect many people with disabilities to lose Medicaid coverage once they qualify. They, unlike several other populations such as healthy adults or pregnant women, are less likely to only need coverage temporarily or just until they can get back to work. This is why I think it’s likely that disabled individuals are simply receiving their coverage through different means.

One way this could happen is through what I’ve called “PTD shifting,” which is something that I’ve been warning about since early 2020. PTD (permanent total disability) shifting was a key component of Medicaid expansion supporters’ claims that adopting the proposal would be costless for Missouri taxpayers. PTD shifting occurs when states exploit the way Medicaid is financed to shift a significant portion of disabled enrollees’ costs to the federal government. Given that people with disabilities often have a variety of complex medical issues, providing them health coverage can be very expensive, which in turn means that shifting these high costs to the federal government could save states a lot of money. The problem is that the federal government has explicitly stated numerous times that this practice is not allowed.

To be clear, I don’t have any definitive proof that Missouri’s Medicaid agency is doing anything wrong, but the latest program enrollment data should be raising some eyebrows. If my fears are confirmed, and Missouri is practicing PTD shifting, state taxpayers might soon be on the hook for an enormous Medicaid bill. This is because once the federal government discovers a state has been wrongfully receiving extra federal funds to support its Medicaid program, the feds could require state taxpayers to pay them back, which in this case could amount to hundreds of millions of dollars.

Needless to say, Missouri’s Medicaid program deserves a closer look from our state’s elected officials as soon as possible. The longer it takes to get to the bottom of what’s going on, the more difficult and expensive the fix is likely to be.

The post Medicaid’s Checkup: Part 3 appeared first on Show-Me Institute.

In December 2024, in Springfield, Missouri, the Show-Me Institute and Show-Me Opportunity hosted an event featuring Dr. Aaron Hedlund, Chief Economist at the Show-Me Institute, and Elijah Haahr, former Missouri Speaker of the House and host of The Elijah Haahr Show on KWTO.

The discussion focused on the 2025 economic outlook for Missouri and the U.S., exploring issues such as unsustainable government spending, the growing national debt, and the Federal Reserve’s role in shaping inflation, housing, and labor markets.

This episode is a recording of that event.

Listen on Spotify

Listen on Apple Podcasts 

Listen on SoundCloud

Produced by Show-Me Opportunity

The post 2025 Economic Trends for the U.S. and Missouri with Aaron Hedlund and Elijah Haahr appeared first on Show-Me Institute.

Elections and inaugurations are a time for reflection and a recommitment to principles. As Missouri prepares for the new administration of Mike Kehoe, it’s worthwhile to consider the performance of his predecessors—especially on issues relating to fiscal management of taxpayer resources.

The Cato Institute, a libertarian-minded think tank based in Washington, DC, rates the fiscal performance of governors. The good news is that Governor Mike Parson is not the worst governor in the United States, but he’s the worst one who claims to care about limited government.

Cato has issued its report every two years since 1992. The report methodology, available online here, issues a letter grade based on each governor’s success at restraining spending and tax increases. Parson earned a D grade in 2024. Author Chris Edwards wrote, “Parson has been a tax reformer, but he has dropped the ball on spending control. The general fund budget has jumped from $10.5 billion in 2022 to an expected $15.6 billion in 2025, a 49 percent increase in just three years.”

The D grade placed Parson 40th of the 48 governors rated. Florida governor Ron DeSantis was ranked 19th and Virginia Governor Glenn Youngkin came in 15th. Parson was closer to Minnesota governor and recent vice-presidential caudate Tim Walz, who came in last. Of Missouri’s neighbors, governors of Iowa, Nebraska, and Arkansas each earned an A grade, ranking 1st, 2nd and 4th respectively. Even Illinois governor J.B. Pritzker and California’s Gavin Newsom outperformed Parson, placing 32nd and 35th respectively.

If one uses Republican party identification to denote a preference for small government and low taxes—and that is arguable these days—Parson’s 40th-place ranking stands out even more. It made him the worst-scoring Republican in the nation. And 2024’s score is not a fluke; Parson scored a D in 2022 and a C in 2020.

Parson doesn’t just compare poorly to other current governors; he scored poorly compared to past Missouri governors. Parson’s letter grades surpass only those of Mel Carnahan (scoring D, D and F) and Robert Holden (F). Parson even seems to score worse than Jay Nixon, whose scores were B, C, D, and D. (If you’re wondering, Matt Blunt was the best scoring governor since 1992, earning Missouri’s only A in 2006 and a B in 2008.)

Note that the report’s methodology changed for the 2008 report but has remained the same since. Previous iterations relied on many more variables, but the outcomes are unlikely to have been much different.

Missouri’s total spending has practically doubled in the last five years, including not just the general fund, but other dedicated state funds and federal money. That total spending jumped from $27 billion in 2019 after Parson’s first year in office to a little more than $50 billion for 2025. It now costs three times as much to run Missouri as it did in the Carnahan and Holden administrations!

Parson’s profligacy stems from the decisions he’s made since the federal government’s COVID relief funds flooded Missouri’s budget with billions of dollars in one-time cash. States were given considerable discretion on how to use much of the relief funding, not to mention the state tax dollars the federal cash freed up for other uses. Unfortunately, Parson, with the help of Missouri’s General Assembly, fell victim to the allure of so-called free money.

Today, Missouri’s budget is littered with what were once temporary initiatives that never ended and now receive permanent funding. Or, perhaps worse, formerly federal obligations that are now borne by state taxpayers.

Key among these includes Parson’s decision to use state funds to maintain the higher childcare subsidies the federal government subsidized during the COVID pandemic, now costing state taxpayers at least $70 million annually. Parson also failed to meaningfully manage Medicaid spending. Missouri’s lackadaisical approach to checking program recipient eligibility, after the federal government lifted its COVID-era ban on the practice, has likely cost taxpayers hundreds of millions of dollars thus far.

In addition, Parson increased state employee pay by 7.5% plus an additional 3.2% cost of living increase last year. These raises were paid for with a temporary influx of state funds, but because the increased pay was not made commensurate with employee reductions, the higher salaries will require new permanent funding sources and will increase the obligations of the already underfunded state pension system.

Governor-elect Kehoe has a difficult job ahead of him administering government and working to attract more families and employers to the Show-Me State. Unfortunately, his predecessor has done him—and the people of Missouri—a great disservice by failing to properly manage taxpayer funds.

The post Missouri Must Do Better at Controlling Spending appeared first on Show-Me Institute.

If Missouri’s elected officials are serious about addressing our state government’s unsustainable growth, they should look at past efforts undertaken across the country to see what might work. Perhaps the most successful state-based cost-cutting initiative in history was then–California Governor Ronald Reagan’s 1967 executive order creating the “Governor’s Survey on Efficiency and Cost Control”. (The text of that order is available here.)

Reagan’s blueprint outlined some some key principles that any Missouri initiative should consider:

Governor Created

• The Governor is the elected official best situated to coordinate an effort that examines all parts of Missouri government and to start implementing solutions. He can ensure that all executive branch officials cooperate in providing information and executing reforms.

Goal-Oriented

• To help ensure success, the initiative needs to start with a clear mission, a top-level objective, stretch goals, and a commitment from everyone involved (inside and outside government) to reach those goals.
• Much of the data needed to inform decisions will not be immediately available. Rooting out inefficiency will require targeted requests or establishing new metrics to get the information necessary to achieve the initiative’s goals.

Led by Non-Government Experts

• Reagan understood that getting a handle on government growth required innovation, creativity, and outside-the-box thinking that could only come from those outside of government. A Missouri initiative should seek insights from business executives, nonprofit experts, former government officials, and financial consultants with prior public-sector knowledge or experience successfully turning around companies.

Privately Funded

• Efforts to find cost savings in government shouldn’t be dependent on government funding for functioning. Reagan’s efficiency initiatives at both the state and federal level were entirely funded by private sources.

Pre-Specified Timelines

• Time is of the essence for Missouri when it comes to cutting costs. Ensuring the work is completed in a thorough and expedient fashion will require deadlines, perhaps with the option to extend them based upon meeting preapproved metrics.

Commitment to Implementing Solutions

• One of the biggest hindrances to Reagan’s cost-cutting efforts was a lack of legislative commitment to implementing the survey’s recommendations. In fact, only about one third of the recommended cost savings could be realized without any legislation being passed. Going into the efficiency exercise with a commitment from legislative leaders will be key for the initiative’s lasting success.

All told, Reagan’s citizen-led commission of more than 200 private-sector leaders was able to recommend, in short order, more than 2,000 reforms to improve California’s government operations and significantly cut costs. These recommendations included long-term savings estimates for California taxpayers of more than $500 million, which if adjusted for inflation would amount to about $4.2 billion today.

A similar result for Missouri today would be a much needed step in the right direction. It’s long past time for a serious effort in Jefferson City to rein in the state government’s excess, and taking a page out of Reagan’s book by turning to the private sector for meaningful solutions might be the most promising path forward for achieving long-term success.

Following the Reagan and DOGE frameworks, here are some specific examples of what a Missouri initiative could look like:

Creation

• Establish by executive order a Missouri Office of Government Efficiency (MOGE)

Objective

• Mission: The Missouri Office of Government Efficiency (MOGE) would conduct a comprehensive review of Missouri’s government. This review would include all services, programs, spending, regulations, and administrative practices. The goal would be to determine how Missouri’s government can be improved, as Governor Reagan specified in his original executive order, to be “the most efficient, expeditious, and economical” in the country.
• Pre-Specified Timelines: This review, along with actionable recommendations, should be completed by no later than December 31, 2025.
• Insights from Business (performance metrics): Given that Missouri’s budget is approximately twice its pre-COVID size, federal COVID relief for states is ending, and state tax revenues are down, a reasonable goal would be to return Missouri to its fiscal year 2019 cost trajectory unless a cost–benefit analysis by MOGE clearly justifies an alternative savings target. In dollar terms, this would amount to an approximate inflation-adjusted reduction of $2 billion in general funds.

Organizational Structure

• Led by Nongovernment Experts: The governor could appoint two highly respected leaders from outside of government who have a proven track record of delivering transformational change to large organizations to lead MOGE. In addition, to help ensure the initiative’s success, MOGE leadership should be allowed to select any additional staff or members they deem necessary to conduct the review.
• Privately Funded: The Governor or his allies could fundraise, as Reagan did, to fund MOGE. Ensuring that all funds used to conduct the work of MOGE come from private rather than public sources removes any undue leverage that government could have over MOGE and its policy recommendations.

Commitment to Implementation

• Agency Cooperation: The Governor could order all government agencies to give full and timely cooperation to any MOGE requests for access to data or other information that MOGE deems necessary to conduct its work, except for any instances expressly prohibited by law.
• Citizen Participation: MOGE leadership should commit to publishing intermediate findings and recommendations, formally submitting progress reports to Missouri’s General Assembly, and creating a website or holding public hearings to solicit input from members of the public who in many cases have pertinent first-hand knowledge of government inefficiencies and needed services that MOGE’s internal audit of agencies may not fully uncover.
• Legislation: Fostering input and cooperation from Missouri’s General Assembly will be essential to achieving MOGE’s specified goals. To that end, the Governor should seek a commitment from legislative leaders both to cooperate with the MOGE efforts and to advance the legislative initiatives recommended to reduce the cost and increase the productivity of state government.
• Transparency: MOGE leadership should make all final recommendations public with supporting analysis and make its leadership available for public hearings and information sessions to explain its findings and methodology.
• Accountability: After MOGE issues its recommendations, the executive branch should be required to respond to every agency recommendation by either implementing it in full or detailing why it is not doing so.

The post Establishing a Missouri Office of Government Efficiency (MOGE) appeared first on Show-Me Institute.

Click here to download this publication.

The post Missouri’s Free-Market Policy Guide appeared first on Show-Me Institute.

The report advocates for a substantial reduction in federal spending, emphasizing the elimination of programs that are redundant or fall within state jurisdiction. The goal of this new approach is to alleviate the economic burdens imposed by excessive federal regulations and expenditures.

Missouri needs to conduct a similar exercise. The state’s budget has expanded significantly, with general revenue spending increasing nearly 50% over the past three years. As my colleague Elias Tsapelas has pointed out, this led to a “D” grade for Governor Mike Parson in the Cato Institute’s Fiscal Policy Report Card, indicating a pressing need for more disciplined fiscal management.

These reports serve as critical reminders of the importance of efficient government operations. We need a leaner government that prioritizes essential functions and empowers states to manage their affairs more effectively.

The post Does Missouri Need a DOGE? appeared first on Show-Me Institute.

First, here’s a quick recap of what’s happened with the program in recent years. In March of 2020, the COVID-19 global pandemic began, and the federal government declared a national state of emergency. Over the next several years, Medicaid’s enrollment boomed, and in response the federal government agreed to increase its share of funding for the program. But as is almost always the case, the additional federal money came with strings attached. Particularly, accepting the funds required Missouri’s Medicaid agency to stop checking whether program enrollees were eligible to receive services. This prohibition continued until the end of March 2023.

Additionally, during the pandemic period, Missouri voters approved a constitutional amendment that radically reshaped the state’s Medicaid program. The amendment expanded Medicaid by extending program eligibility to able-bodied Missourians making up to 138 percent of the federal poverty level. For a family of four, this figure represents yearly earnings of approximately $43,000. Unsurprisingly, this expansion has led to an enormous increase in program enrollment, and as with COVID relief funds, the federal government agreed to pay an increased share for those newly eligible to enroll.

Given these developments, it shouldn’t be surprising that Missouri’s Medicaid program looks much different today than it did four short years ago. Prior to the pandemic in 2019, Missouri’s Medicaid enrollment sat around 850,000, with about 520,000 of those enrolled being children. By 2023, total program enrollment had nearly doubled to 1.5 million, with approximately 740,000 of those being kids and 350,000 being adults who had enrolled as a result of the change in eligibility requirements. Today, according to the state’s most recent enrollment data, there are still nearly 1.3 million Missourians on the program, including 640,000 children and 340,000 “expansion” adults.

In terms of cost, the growth has been similarly shocking. In 2019, the program cost around $10.4 billion in total, with less than $2.2 billion coming from Missouri taxpayers via state income and sales taxes. In this year’s FY 2025 budget, Medicaid’s total cost has ballooned to an expected $18.2 billion, with $3.8 billion coming from state taxpayers. This represents a total increase of approximately 75%, and the growth of state taxpayer investment isn’t much lower at 74%.

In several upcoming blog posts, I’ll dive deeper into these numbers and explain why it’s important that our elected officials take action to rein in our Medicaid program sooner rather than later.

The post Medicaid’s Checkup: Part 1 appeared first on Show-Me Institute.