Kehoe signs $50 billion budget with about $490 million in vetoes, restricted funds

JEFFERSON CITY, Mo. (KMIZ)

With the new fiscal year set to start on Wednesday, Gov. Mike Kehoe on Tuesday signed a fiscal 2027 state budget of about $50 billion, while vetoing or restricting about half a billion dollars in funding, including money for major local projects.

Among those projects are the University of Missouri's Energy Innovation Center and a new campus agriculture center. Kehoe decided to restrict $2 million meant for the innovation center and $5 million meant for the ag center. That money could be spent later if state finances improve.

Overall restrictions totaled about $441 million.

Kehoe’s actions align with priorities he first outlined in January, when he called for significant spending restraint as Missouri faces what his administration described as a long-term structural budget imbalance.

His proposed fiscal year 2027 budget cuts roughly $600 million from the state’s core operating budget compared with the prior year. It aimed to reduce overall spending from $55.1 billion to $54.5 billion while returning state finances closer to pre-pandemic spending levels.

State officials have pointed to shrinking reserves, the expiration of federal COVID-19 relief dollars and years of spending growth as reasons for tighter budget controls.

At the same time, Kehoe preserved funding in areas his administration identified as top priorities. The budget includes about $2 billion for public safety initiatives, including Missouri Blue Shield grants, Operation Relentless Pursuit and law enforcement scholarships; $338 million for economic development and workforce programs; $59.4 million for agriculture investments; $9.8 billion for education, and $24.8 billion for healthcare and Medicaid-related services.

Kehoe has repeatedly warned about too much spending by the General Assembly, and echoed that sentiment in a statement released Tuesday.

“State government doesn’t have a revenue problem, we have a spending problem, and continuing to spend faster than we grow our economy is not a sustainable path forward,” Kehoe said in a news release. “Our work doesn’t end with balancing this year’s budget. By maintaining fiscal discipline and continuing to grow Missouri’s economy, we are building the foundation for an even more strong and resilient Missouri.”

The budget included using $179 million in one-time funding to pay for ongoing costs, Kehoe's office stated in the release.

Kehoe vetoed 65 line items worth more than $52 million in revenue. That money included $250,000 for Mid-Missouri-based Coyote Hill Foster Ministries and $500,000 for Powerhouse Columbia, both budgeted through the Department of Social Services.

Another $250,000 was voted for substance abuse and mental health treatment courts.

The governor vetoed $500,000 for a security grant program for nonprofit organizations. Joran Kadosh, regional director of the Anti-Defamation League Heartland, said in a prepared statement that such funding was critical right now.

"At a time when hate-fueled threats and violence continue to target Jewish institutions and many other faith-based and community organizations, investments in nonprofit security are not optional—they are essential," Kadosh wrote. "We are disappointed that funding for Missouri's nonprofit security grant program was vetoed. These grants would have provided houses of worship, schools, and community organizations with critical resources to strengthen their security and help protect the people they serve.”

Restrictions total about $441 million.

Kehoe preserved $15 million for Jefferson City's downtown conference center project. City leaders praised the action, and Mayor Ron Fitzwater emphasized in a prepared statement that the conference center will leverage the city's status as the state capital to attract visitors and business.

Check back for updates to this developing story.