Inside Missouri's budget deliberations: balancing fiscal responsibility and state priorities

Four weeks into the 2025 legislative session, and the Missouri House of Representatives has created a flurry of action as bills move through committee and make their “way to the House floor.

House Budget Committee Progresses Through Department Recommendations

This week, the House Budget Committee continued evaluating the Governor’s proposed operating budget, hearing testimony from various departments to assess financial needs against taxpayer resources. Lawmakers reviewed budget proposals and funding requests across multiple agencies, focusing on responsible allocation.

Last week, the committee was presented with the state’s proposed supplemental budget, with the Office of Administration and the State Budget Director reporting a $2.1 billion shortfall for fiscal year 2024 due to underestimated expenses, slow lottery sales and new education programs. Last year’s budget was $51.6 billion after vetoes, but Medicaid spending cuts contributed to the deficit.

Gov. Mike Kehoe’s proposed $53.7 billion budget for the next fiscal year includes a $942 million supplemental request for Medicaid and key allocations such as:

• $142.4 million for public schools

• $129.8 million for mental health services

• $110 million for disability services

• $95 million for home and community-based Medicaid services

• $20.7 million for prison healthcare

Legislators questioned the decline in lottery revenue, speculating that unregulated gambling machines are impacting sales. They also raised concerns over delayed childcare payments, which are straining providers financially.

This week’s hearings covered funding for ARPA, infrastructure, employee benefits, and security, with testimony from the National Guard, Revenue, Transportation, State Auditor, Agriculture, an Natural Resources departments. As budget deliberations continue, the committee will balance departmental needs with fiscal responsibility to ensure effective use of taxpayer dollars, refining the budget to align with state priorities.

An Update on General Revenue

The Missouri State Budget Director reported an 11.5% decline in net general revenue collections for January 2025 compared to .January 2024. with year-to-date collections down 2.2%. Individual income tax collections rose 5.9% for the year but saw a sharp decline of 26.9% for the month. Pass-through entity tax collections dropped 42.3% for the year but surged 435.9% in January. Sales and use tax collections. corporate taxes, and other collections saw declines, while refunds increased by 8.3% for the year and 15.5% for the month.