Missouri Legislators’ Priorities Revealed in Budget Process – Progress or Pandering? You decide.
A budget is a clue about values and priorities. By examining your personal spending, you may find money going to things you don’t value—like forgotten subscriptions—while neglecting what truly matters, such as education, home repairs, or savings.
The same applies to government budgets, which reflect the priorities of our elected officials. Do they fund essential needs like healthcare, housing, education, public safety, and infrastructure, or do they serve political ambitions and wealthy donors? A closer look at the state budget process in the Missouri legislature this month reveals where lawmaker’s priorities truly lie.
Missouri House Passes Budget for Fiscal Year 2025
This past week, the Missouri House of Representatives passed thirteen appropriations bills necessary to fund the state government for the next fiscal year and sent them to the Senate for deliberation. The bills constitute a $48 billion budget for state operations, about $2 billion less than the budget proposed by Governor Kehoe. The House plan also trims about $800 million in revenues from Kehoe’s original estimates, primarily due to cuts in Medicaid due to lower expected enrollment numbers and reductions in state worker pay increases proposed by the Governor. Most of the spending bills passed with bipartisan support from Republicans and Democrats, with two major exceptions.
Education: The House adopted Kehoe’s budget proposal that shortchanges funding for public schools by $300 million. Missouri funds local K-12 schools each year according to a “foundation formula” that considers student attendance, an “adequacy target” per student, local cost of living, and the amount of funding a school district raises locally. The adequacy targets are key – they reflect the funding needed to enable students to meet state performance standards.
The House budget does increase education spending by $200 million over last year’s budget, providing funding for items such as school transportation and increases in teacher salaries. However, it arbitrarily reduces the “adequacy target” component to reduce the amount of funding that would have been required under the foundation formula by $300 million. That’s real money that local school systems anticipate receiving yearly when they craft their budgets. So, either they find the money elsewhere by increasing local taxes, for example, or they do without, which means cutting instructional programs or forgoing teacher pay increases.
At the same time, the House budget allocates $50 million to MOScholars, a tax credit program to provide tuition assistance to private, parochial, and home-schooled students. The funding for MOScholars was intended to come from individuals, corporations, or other institutions who would receive a tax credit for their donations. Top donors have included United Healthcare, Charter Communications, the Hunt family (owners of the Kansas City Redskins), billionaire Rex Sinquefield, Hobby Lobby, World Wide Technology and others. Nevertheless, the program has fallen short of its funding goals, prompting the Governor and legislators to redistribute $50 million of taxpayer money from local public schools to private interests.
Democrats in the House unsuccessfully attempted to amend the education appropriations bill to shift the $50 million targeted for MOScholars back to public school funding. They argued that private schools in the program were free to deny enrollment to children with disabilities or special needs and could reject children and families that did not adhere to their religious and/or political beliefs. The Missouri School Board Association criticized the MOScholars program as being “…at best unproven and at worst unsuccessful at demonstrating any improved outcomes for Missouri students.”
Childcare - Legislation to provide tax credits to businesses that offer childcare benefits to employees and other assistance to childcare providers has drawn broad bipartisan support this year. The state has found itself in a childcare crisis for several years, and the problem is widely seen as a serious impediment to its economic health and growth. The House passed the childcare tax credit bill sponsored by Republican Brenda Shields, and a Senate committee reviewed the bill this week without opposition.
However, while legislators applauded progress on the tax credit bill, House Republicans turned their back on another state childcare program by refusing to provide additional funding for the childcare subsidy program for low-income families, as proposed by Governor Kehoe. Administrative and technical glitches have plagued the program in a software system managed by World Wide Technologies, whose owner is one of the largest contributors to Mike Kehoe’s campaign for governor. The problems have led some childcare providers to go out of business and left working families without childcare resources in their communities. While the technical issues have been resolved, the governor supports a change in how the state reimburses childcare providers, from an attendance standard to a calculation based on the number of children enrolled, which could put providers on a more solid footing financially. As Gov. Kehoe said earlier this year: “We will not allow late payments or technology issues to put these small businesses at risk of not being able to provide for families in need of childcare.”
The change would require modest funding to make administrative and system changes (0.2% of the $48 billion budget). However, Republican Budget Chair Dirk Deaton said it would be too expensive, and besides the earlier system, problems with the program had been fixed. Making changes now, said Deaton, could cause problems to resurface. Democrat Rep. Hein argued during the debate on the budget bill that the state has an opportunity to “…stabilize the childcare industry and help our workforce." She proposed an amendment to restore at least a portion of the funding requested by the Governor, but like the education bills, her amendment was defeated.
Jefferson City Budget Request – while many of the main House appropriations bills have been sent on to the Senate, several spending proposals submitted by the Governor for specific projects and areas remain in the Budget Committee. Last week, Jefferson City Administrator Brian Crane and Luke Holtschneider of the Jefferson City Regional Economic Partnership appeared at a committee hearing to request that $20 million of the money that had been designated for the Missouri State Penitentiary site be directed to the Madison Street parking garage, which is in serious disrepair.
If city plans are successful, the parking garage is slated to be replaced by a new $130 million conference center, hotel, and parking complex. According to press reports, lawmakers acknowledged parking was an issue in the capital city. Still, they questioned whether the new conference center would increase the available parking spaces over what exists today. They seemed skeptical of authorizing additional funds for downtown parking tied to the conference center project. They questioned the need for a conference center, given the existing hotel and event space in the downtown area.
The latest reports indicate that Jefferson City is almost $40 million short of funds necessary to initiate the conference center project, so an additional allocation of $20 million to help offset parking costs would be welcomed. Despite the reservations of many of its members, the House Budget Committee amended an appropriations bill to Jefferson City’s funding request. However, to help recoup the money for the parking garage, the committee reduced the Governor’s allocation of $52 million to help preserve and renovate the Missouri State Penitentiary site to $15 million, an amount the committee chair Dirk Deaton believed would be sufficient to maintain the existing buildings. Jefferson City’s request for additional parking garage funds will now have to survive a vote on the House floor in addition to the Senate appropriations process and, ultimately, the Governor’s signature.
Tax Bills Could Undermine Future State Revenues
As the Senate prepares to take up the House appropriations bills, most likely the week of April 14, the legislature continues its work on other bills that could significantly impact future state revenues, jeopardizing the state's ability to pay for the budget just passed by the House and under consideration in the Senate.
One major proposal would exempt long-term capital gains on investments held by individuals and corporations from the state income tax. It’s one of several pieces of legislation designed to eventually eliminate all income taxes in Missouri, a goal of Kehoe and many Republicans. The House approved the bill, and it passed it this week in the Senate. It must survive another vote in the House before going to the Governor for his signature.
The latest estimates from the Missouri Department of Revenue indicated that exempting capital gains from state income taxation would reduce state revenue by $341 million in FY 2026 alone. However, others, including the Institute on Taxation and Economic Policy and the Missouri Budget Project, believe a more realistic estimate would be $500-600 million.
The Missouri Budget Project estimates that 80 percent of the tax exemption on capital gains will benefit only the top 5 percent of Missouri taxpayers. Over two-thirds will accrue to the top one percent—or those with incomes averaging $1.9 billion annually.
Senate Democrats filibustered the bill when it was first debated on the Senate floor and won several concessions. Those included a state sales tax exemption for diapers and feminine hygiene products and enhancements to a refundable property tax credit available to people over 65 and people with disabilities.
All but one Republican voted for the bill as well as half of the Democrats. Still, Senators worried about passing bills that will reduce revenue in the future. Senate Appropriations Chair, Sen. Lincoln Hough, in recent weeks, expressed serious concerns on the Senate floor about the capital gains tax exclusion coupled with the real threat of losing funding from the federal government as part of the cost-cutting measures of Congress and the Trump administration.
Looming Cuts in Medicare and/or Medicaid Will Stress Missouri Budgets
The Trump administration is demanding that $880 billion be slashed in the budgets of Medicare and Medicaid. Congressional Republicans will likely try to take most of those cuts by reducing the percentage the federal government pays for those recipients who became eligible for benefits under the expansion of Medicaid under the Affordable Care Act. If that happens, the State of Missouri will be forced to make up the difference. That’s because the obligation to provide healthcare coverage for the expansion population is now enshrined in the state constitution, due to the passage of the voter initiative to expand Medicaid in Missouri passed by voters in 2020. If and when those cuts happen, the legislature must reconvene to address the budget shortfalls and reckon with whatever decision it makes now on tax exemptions that might undermine future revenue flows.
Let the Welfare of the People be the Supreme Law
In its press statement, House Republicans applauded their passage of a balanced state budget with “historic investments in education, public safety, and transportation.” That included the increase of $200 million in education spending and transferring millions of dollars to private and parochial schools, without mentioning shortchanging the foundation formula targets by $300 million and their refusal to fund improvements to the childcare subsidy program. “We’re proud to have found savings and efficiencies across state government,” Deaton said at a news conference after the House action.
Democrats, in their press conference after the budget was passed, cited the Missouri Motto "Let the welfare of the people be the supreme law” as the measure that should be used to assess the outcome of the budget process. Rep. Del Taylor of St. Louis emphasized that the most important thing is not the number of dollars saved or the amount cut from the budget. It’s whether lawmakers have adequately addressed the state's and its residents' needs. While the legislature has the responsibility to be fiscally responsible, he questioned why lawmakers would cut state programs that have been and continue to be successful.
The constitutional deadline for having the budget passed and delivered to the governor is May 10, 2025.
References:
https://www.newstribune.com/news/2025/apr/04/lawmakers-meet-city-budget-request-with-skepticism/
https://senate.mo.gov/FiscalNotes/2025-1/1683S.04F.ORG.pdf - pg 48
https://mobudget.org/press-senate-tax-giveaway-budget/
I can at this time comment only on a television ad showing our Governor looking into the camera as he walks through what looks like an elementary school. Speaking directly to the viewer he says something like "In my budget I have 50 million dollars for my discretionary spending to increase education in Missouri. I went to a private school as a child. My single Mother worked very hard to pay my tuition and I think it helped me a lot. I cannot think of a better way to spend this money than to use a variety of support methods for private schools."
Although my exact recall of every word is incomplete the statement " I cannot think of a better way to help education than to give this money to private schools" is his message.
I have two suggestions:
First, start the message telling that it is not Your Personal Money; it is money collected from taxpayers. (if it was your personal money, public approval and this advertisement would not be required). So please do not say the words "MY BUDGET"
Second: If that is public money I believe it should go to PUBLIC schools. You are not a lawbreaking man. I have never seen or heard of you being arrested for robbing a liquor store
or selling cocaine on the street.
So why would an honest public servant divert public money to the private sector? Shouldn't Public Money serve public interests via public institutions aka Public Schools? The tax money was entrusted to the public government to serve public interests.
I have studied similar diversions long ago in a small Law school and this sort of thing was called embezzlement. It was not as bad as Larceny, but it was a Crime.
Love your opening argument that our budget is a good reflection of who we are. To use an old expression, our checkbook is where the rubber meets the road. The sad part is that it's looking like the budget that gets adopted will be a pretty clear reflection of politics in Missouri.