Governor Kehoe Takes Action on FY26 State Operating Budget Bills

JUNE 30, 2025

Jefferson City — Delivering on his promise to present Missourians with a reasonable, conservative budget that continues to secure Missouri’s future, today Governor Mike Kehoe signed the Fiscal Year 2026 (FY26) state operating and capital improvement budget bills. Governor Kehoe’s action to deliver a $50.8 billion budget includes 208 vetoes, totaling nearly $300 million in general revenue, and 32 expenditure restrictions, totaling $211 million in general revenue.

The budget sent to the Governor's Office added 450 items and nearly $775 million in additional spending beyond the Governor’s original budget recommendation. This excessive spending requires decisive action, particularly when combined with reduced pandemic federal dollars, broad tax cuts that benefit Missourians, and the undeniable need for extraordinary emergency disaster relief.

"We appreciate the work of the General Assembly in getting this budget to my desk," said Governor Kehoe. "While we exercised veto authority to rein in unsustainable spending, we are proud to support funding for smart policies advancing our shared vision of a safer, stronger, and more prosperous Missouri. We believe this budget reflects our commitment to limited government, fiscal discipline, and a long-term vision to support public priorities."

Approved Budgetary Spending

Prioritizing Public Safety

In his inaugural State of the State Address, Governor Kehoe emphasized that securing Missouri’s future begins with public safety. The FY26 budget includes critical law enforcement and crime prevention tools, training, and resources:

• $10 million in new funding to assist local communities who prioritize public safety with equipment and training needs through the Blue Shield Program.
• $7 million investment for fentanyl testing in wastewater systems at schools.
• $2 million in support for the Missouri sheriff’s retirement system.

For more public safety budget highlights, click here.

Emphasizing Economic Development

Missouri’s economy is driven by investing in initiatives that create jobs, enhance infrastructure, and provide critical support to families and businesses. By addressing needs such as rural roads, childcare access, and career-technical training, we foster innovation, strengthen communities, and ensure that Missouri remains a competitive and thriving state for all:

• $91 million for rural road improvements.
• $10 million to offer grant funding opportunities to support partnerships between employers, community partners, and the childcare industry to make more childcare slots available for Missouri families.
• $11 million in new funding to address equipment, space, and operational needs of career and technical centers across the state.

For more economic development budget highlights, click here.        

Bolstering Agriculture

Missouri’s agriculture industry is the backbone of the state's economy, feeding and clothing not just Missourians, but the world. To ensure the continued growth and resilience of this vital sector, Governor Kehoe is committed to investing in critical infrastructure, modernizing facilities, and supporting animal health initiatives. The FY26 budget includes:

• $55 million in bonding for Missouri State Fair facilities.
• $800,000 in ongoing funding for Missouri FFA.
• $330,871 to increase Missouri’s inspection and production capacity in the meat and poultry industry.

For more agriculture budget highlights, click here.

Strengthening Education

Governor Kehoe believes that funding our state’s education system ensures every student has the opportunity to achieve their full potential while preparing Missouri’s future workforce for success. The legislature approved the following education spending:

• $376.6 million to support the state’s full reimbursement of transportation costs to school districts, including $15 million in new funding.
• $50 million in general revenue funding to bolster the Empowerment Scholarship Account program.
• $33.4 million to ensure all teachers are paid at least the statutory minimum.

For more education budget highlights, click here.

Budget Vetoes & Expenditure Restrictions

The Missouri FY26 state operating budget is approximately $50.8 billion, including $15.4 billion in general revenue. In the FY26 budget approved by the General Assembly, nearly $775 million in new general revenue spending was added above the Governor's budget recommendation, including 450 items that Governor Kehoe did not propose or went beyond his recommendation.

Additionally, the Office of Administration’s Division of Budget and Planning estimates a nearly $1 billon shortfall in general revenue starting in FY27. Contributing to this shortfall, ongoing general revenue spending authorized in the FY26 budget is projected to outpace ongoing revenues by over $1 billion and grow larger in future years. While Missouri currently has a general revenue fund balance to absorb some of this imbalance in the short term, the current trajectory of state-level spending grows this imbalance, exhausts any remaining surplus, and leads to the aforementioned $1 billion shortfall starting in FY27, if correction is not made.

There were also several budgetary and legislative decisions made during the 2025 Legislative Session and Extraordinary Session that were not considered in Governor Kehoe’s FY26 budget recommendation but compound the budgetary challenges the State is facing:

• Additional funding for the K-12 Foundation Formula – In his budget recommendation, Governor Kehoe proposed a $200 million increase for public education funding, representing the largest increase ever seen, and nearly 4 times larger than the average annual increase. The General Assembly chose to spend an additional $297 million on top of Governor Kehoe’s historic recommendation.
• Tax Cuts – The General Assembly approved, and Governor Kehoe has committed to signing, pro-growth legislation eliminating the income tax on capital gains, which is expected to reduce state revenues by approximately $400 million annually. Governor Kehoe supports tax cuts and is proud to return Missourians’ hard-earned dollars back to them, but the reduction in state revenues must be accounted for in current and future budget decisions.
• Disaster Relief – Unforeseen severe storms, tornadoes, and flooding have caused unprecedented damage to communities across the state. Governor Kehoe supported, and the General Assembly approved, over $210 million in extraordinary emergency disaster relief for Missourians. While the need is undeniable, the cost must still be reconciled in the budgetary process.

Governor Kehoe issued 208 vetoes, totaling nearly $300 million in general revenue. To view the complete list of budget vetoes, click here.

"As Governor, I have a constitutional obligation to balance the budget, and our administration will always follow the Constitution and rule of law," said Governor Kehoe. "We support funding for education, and have proudly championed tax cuts for hard-working Missouri families and the desperately needed resources for our fellow Missourians affected by natural disasters this spring. However, these initiatives do not come without budgetary consequences."

In addition to his vetoes in the FY26 budget, Governor Kehoe today also restricted spending on 32 budget items, totaling $211 million in general revenue, from the FY26 state operating budget. To view the complete list of expenditure restrictions, click here.

"We do not take this action lightly, but state government cannot spend beyond our means," said Governor Kehoe. "With current circumstances, the fiscally responsible and conservative thing to do is reduce spending and protect Missouri’s nationally recognized financial strength in preparation for difficult budget years ahead. These restrictions are not an indication of project worthiness – we understand their value, and that’s why we chose not to veto them. Rather, these withholds allow us to direct Missourians’ hard-earned tax dollars toward the most critical programs and projects that support Missouri families."

Governor Kehoe is taking these fiscally conservative steps now in an effort to help ease the burden of broader budget cuts required to balance the budget, a constitutional responsibility of the Missouri Governor, in FY27 and future years. Governor Kehoe and his Office of Administration's Division of Budget and Planning budget team, working alongside the General Assembly, will continue to assess Missouri’s financial outlook and evaluate the likely need for additional budget restrictions moving forward.

"We want to assure Missourians that this action is not indicative of a larger economic problem, as our economy remains strong and resilient," said Governor Kehoe. "Just as President Trump and the federal government is reining in spending, the State of Missouri must do the same. While we do not have an economic problem in Missouri, we do have a spending problem in state government. By working with the General Assembly, our administration commits to the people of Missouri to get spending under control and support Missouri’s economic growth so that our fiscal outlook improves and these restrictions may be released in future years."

To view the FY26 state operating budget bills, click here.

• Governor Kehoe Signs FY26 State Operating Budget 6-30-25.jpg

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