Kehoe Signs $50.8B Budget, Cuts Spending with Vetoes and Restrictions

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Governor Mike Kehoe has signed Missouri’s Fiscal Year 2026 (FY26) state operating and capital improvement budget, totaling $50.8 billion, while issuing 208 line-item vetoes and 32 spending restrictions to address what he called "unsustainable spending." The vetoes total nearly $300 million in general revenue, with an additional $211 million withheld.

The budget passed by the General Assembly included 450 new items and nearly $775 million in spending beyond Kehoe’s original proposal. Citing reduced federal pandemic aid, major tax cuts, and emergency disaster relief funding, Kehoe said the state must act now to avoid a projected $1 billion revenue shortfall by FY27.

“This budget reflects our commitment to fiscal discipline, limited government, and long-term investment in Missouri’s priorities,” said Kehoe. “We cannot spend beyond our means.”

Key Spending Highlights:

  • Public Safety: $10M for the Blue Shield Program, $7M for fentanyl testing in schools, and $2M for sheriff retirement support.

  • Economic Development: $91M for rural roads, $10M for childcare expansion grants, and $11M for career and technical centers.

  • Agriculture: $55M for Missouri State Fair facilities, $800K for Missouri FFA, and $330K to boost meat and poultry inspection.

  • Education: $376M to fully fund school transportation, $50M for scholarship accounts, and $33M to raise teacher pay to the statutory minimum.

Kehoe emphasized the importance of balancing the budget in light of other recent legislative decisions, including:

  • An additional $297 million in K-12 funding beyond his historic $200 million recommendation.

  • $400 million in anticipated annual revenue loss due to elimination of capital gains taxes.

  • Over $210 million in emergency disaster relief funds for recent storm damage.

“These cuts are not a reflection of a weak economy, but of a government spending problem,” said Kehoe. “By acting now, we aim to avoid more severe budget cuts in the future.”

Kehoe’s administration will continue monitoring the state’s financial outlook, with the possibility of further budget restrictions if necessary.

For a full list of vetoed and restricted budget items, visit budget.mo.gov.

KPGZ News – Brian Watts contributed to this story.