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Missouri governor cuts $1 billion from state budget approved by lawmakers • Missouri Independent
More than 170 items were removed from the Missouri state budget Friday, when Gov. Mike Parson cut $1 billion from the spending plan approved this year by lawmakers.
In a statement explaining his cuts, Parson said he vetoed earmarked items he believes were included in the budget for special projects and organizations without considering the state’s future financial stability.
“Using the veto pen is not something I do with enthusiasm, but today’s vetoes represent the elimination of unnecessary pet projects and the protection of taxpayer dollars,” Parson said in a press release announcing his budget actions. “We may be leaving $1.9 billion on the bottom line, but that doesn’t mean we’re spending for the sake of spending.”
It was the second year in a row that Parson cut the budget, despite near-record surpluses.
One of the biggest cuts was $150 million in general revenue that was part of a $727.5 million plan to expand Interstate 44 in southwest Missouri. The cut leaves $577.5 million available, with $363 million coming from borrowed money.
Other projects, large and small, that Parson did not approve include grants to nonprofit organizations, support for local projects and set asides that targeted a single supplier for a state purchase.
Many of the individual items contained a disclaimer—that the fund being used was “grossly over-appropriated,” that it was a local responsibility, or that the long-term financial health of the state required the cut.
A new education law will cost about $400 million more annually for public schools when fully implemented, with the base formula estimated to be $300 million more in fiscal 2026, Parson wrote in a message that has been repeated several times.
“We have obligations both this year and in future years that must be accounted for today to avoid future budgetary pain tomorrow,” Parson said in the press release.
The budget — $50.5 billion for state operations in the year that begins Monday — has several spending initiatives that Parson approved. He requested several of them and accepted others added by lawmakers.
- Nearly $700 million for roads, including $577.5 million for I-44, $150 million to widen US 67 through Butler County and $40 million for construction of US 65 from Buffalo to Warsaw .
- Full funding of the state’s 75% share of school transportation costs for the third consecutive year. Transport support was not fully funded for almost 30 years, until the budget surplus began to grow.
- A 3% increase in funding for state colleges and universities, plus $367 million in new funding to complete construction projects started in 2022 or to build new campuses.
- A 3.2% salary increase for public employees.
- An increase in state grants to support teacher pay to bring the minimum wage to $40,000. In May, Parson signed a bill demanding a minimum wage of $40,000 for all districts.
- $1.5 billion in federal grants to expand broadband access in rural areas.
- $56 million for public and charter schools to provide preschool programs to all students eligible for free and reduced lunch.
Parson left in place initiatives he called for, such as fee increases for child care providers, even though the budget did not fund them at the levels he requested.
Some of the vetoed items became the target of criticism, including $12.5 million to purchase land for a state park in McDonald County inserted into the budget by state Rep. Dirk Deaton de Noel.
Parson also vetoed $1 million to help Deaton’s hometown recover from the closure of a plant in Tyson. The state helped plan job fairs and sought to market the Tyson plant, the veto message states.
“In spite of all of these efforts, the state has failed to determine the intended use of these specific funds,” Parson wrote.
There were other items vetoed because there was little information about how the money would be used.
For one, $502,000 to support a historical society that operates a museum and cemetery, the administration had no information about.
“The demographic language is not specific enough to identify where this project is located,” Parson wrote.
Some of the vetoed items were repeats from last year. One of those items was $8 million for a police training center in O’Fallon in St. Charles County.
“This project is built on a partnership that includes commitments from five different counties in the region,” Parson wrote. “While the state senators representing the county in which this facility is located voted against (the spending bill), it leads my administration to believe that there is not broad regional support for this training facility.”
St. Charles is represented by state Sens. Bill Eigel of Weldon Spring and Nick Schroer of Defiance, members of the Freedom Caucus that disrupted plans for an orderly debate on the budget. with a 41-hour obstruction.
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One of the smaller items that was vetoed was $38,000 for sales tax refunds requested by state Sen. Mike Moon of Ash Grove. The refunds were for taxes considered due when the interpretation of tax legislation changed due to a court ruling.
None of the cut items were vetoed because the State lacks money.
As of May 31, the general revenue fund held $4.8 billion, and there was $1.6 billion in the bank in other funds that could be spent as general revenue. There are also funds set aside for large projects that are not so far along that they cannot be stopped, such as $600 million set aside for the expansion of the state Capitol building.
Parson’s administration released a two page summary seeking to dispel the idea that the state has a substantial cash surplus. There are large fund balances, the document states, but there are also large outstanding obligations that will reduce those balances.
“The reductions in revenues and increased ongoing expenditures enacted by recent legislation mean that we have obligations beyond the current fiscal year that depend on Missouri’s fund balances in the future,” the summary states.
Parson’s budget office projects a general revenue surplus of $1.9 billion on June 30, 2025. The budget approved by lawmakers spent $50.9 billion in total on state operations, with $15.2 million coming from general revenue.
Parson said in the press release that he cut that to $50.5 billion total for operations and $14.9 billion in overall revenue. The budget is based on a projection of $13.1 billion in general revenue.
This means that it is necessary to take advantage of an accumulated surplus to fill gaps in ongoing operations, but there are trends that will reduce the drawdown.
On June 30th, Missouri had a general revenue surplus of US$5.1 billion$1.3 billion more than had been projected when the budget for that fiscal year was written.
Parson’s January budget proposal projected it would fall to $3.2 billion when the current year ends on Sunday and would be at $1.6 billion on June 30, 2025.
Those estimates were based on a slight decline in revenue this year, but through Thursday collections were up 1.1%, which will add a small amount to the surplus. The state has collected $94 million more in general revenue this year, $13.3 billion in total so far, than it did in fiscal 2023.
The forecast for near-flat revenue next year remains unchanged, budget director Dan Haug said Friday in an email to The Independent.
This would mean that approximately $200 million would be available during the next fiscal year, which is not foreseen in the original budget.
The other factor that reduces the use of general revenues and other state funds is the lack of staff in state agencies, in some cases more than 10% below the authorized number.
Efforts to reduce state revenues are pending tax cuts. If this fiscal year ends with revenues exceeding last year’s total by $200 million, that would trigger a reduction in the top income tax rate from 0.1% to 4.7% on January 1.
The increase through Thursday isn’t enough to trigger a refund, but there are charges to come.
“We won’t be able to make that calculation,” Haug said, “until we see what the final collections are.”
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