Missouri Budget

If Missouri lawmakers agree to all of Kehoe’s proposed supplemental spending, that would represent a year-to-year cut of about $600 million. The future revenue picture is also clouded by the governor's efforts to eliminate the state income tax.

In his 2026 State of the State address, Gov. Mike Kehoe said he wants a statewide vote in November on his plan to phase out the state income tax and allow for taxes on things like monthly subscriptions and digital services. Democrats have questioned whether that's possible without wrecking future budgets.

Missouri lawmakers arrive in Jefferson City on Wednesday for the start of the 2026 legislative session, which runs until mid-May. Gov. Mike Kehoe is pushing to eliminate the state income tax, but a smaller budget will likely force spending cuts.

Missouri lawmakers have passed historically expensive budgets in recent years, but next year will likely be different, according to Missouri state Sen. Maggie Nurrenbern, a Democrat from Kansas City. The state's revenue has flatlined when adjusted for inflation, and there is no more surplus of federal money. Nurrenbern said that math means Missouri won't be able to fund all the services it has in prior years.

The fund held $5.8 billion, a record, at the end of June 2023. Without changes to the budget, State Auditor Scott Fitzpatrick warns, the money will all be gone by June 2028.

Missouri Gov. Mike Kehoe’s desire to eliminate the state income tax is an ambitious goal given the projected $1 billion shortfall in general revenue next fiscal year. He joined KCUR’s Up To Date to discuss how the plan could take shape.

This year, Missouri became the first state in the country to tax income, but not capital gains. That could present a challenge as the state prepares to face a budget shortfall.

Missouri's capital gains tax cut will apply to all gains since Jan. 1, and will be reflected in the income tax returns due in April. It's the first state to exempt profits from the sale of assets such as stocks, real estate, and cryptocurrency from income taxes.

The governor’s budget vetoes included money for tutoring programs, road infrastructure improvements, workforce development, food assistance and arts organizations. "These losses are huge," says Arts Asylum director Evie Craig.

Months after area arts and culture nonprofits saw a loss of funds from the National Endowment for the Arts, Gov. Mike Kehoe has vetoed millions more in state support.

The governor's office cited some unexpected budget items, and a recently passed bill eliminating Missouri's capital gains tax, as reasons for reducing spending. His largest veto was over $1 billion for a road construction program.

In addition to legislation addressing the Kansas City Royals and Chiefs' stadiums, the special session will also focus on tornado relief for St. Louis and several projects that failed to get funded at the last minute.