PUTTING PEOPLE FIRST: Governor Parson Takes Action on FY25 State Operating Budget Bills

JUNE 28, 2024

Jefferson City — Today, Governor Mike Parson signed the Fiscal Year 2025 (FY25) state operating and capital improvement budget bills, approving historic investments in the future of Missouri that focus on his top priorities since day one – workforce development and infrastructure.

"Today, we signed a conservative and balanced budget that focuses on two priorities that we know lift every Missourian up: workforce development and infrastructure," Governor Parson said. "By making strategic investments, using common sense, and spending responsibly, we've maintained our AAA credit rating, achieved the lowest unemployment rate in Missouri history, added 163,000 jobs to our economy, and cut income tax burdens by over 20 percent. We've done it all while making historic investments, like the Improve I-70 project, and leaving $1.9 billion on the bottom line."

During his 2024 State of the State Address, Governor Parson again called on the General Assembly to invest in infrastructure projects all across the state, including prioritizing Interstate 44 (I-44) expansion planning following the historic Interstate 70 funding passed by the General Assembly last year. The FY25 budget bills include billions of dollars for critical infrastructure projects:

$1.5 billion for broadband investments in rural and underserved areas of the state.
$577.5 million to pave the way for I-44 expansion from St. Louis to Joplin.
$290 million to boost road and bridge projects within the Statewide Transportation Improvement Program.
$27 million to help upgrade Missouri's airports across the state.

Governor Parson has always understood that public service is about putting people first, a point he reiterated in his State of the State Address. He understands that putting people first requires Missourians receiving the necessary education and skills to meet the demands of the future so they, too, can achieve their American Dream. The FY25 budget prioritizes investments in both education and workforce development systems to provide all Missourians with the tools they need to succeed:

$367.7 million to continue higher education capital improvement projects.
$361.4 million to fully fund school transportation needs for the third year in a row.
$121 million to again fully fund the K-12 Foundation Formula for the sixth year in a row.
$69.3 million for the Career Ladder program to reward educators who go above and beyond normal duties.
$54.4 million for the fifth year of MoExcels projects and employer-driven workforce training investments.
$33.4 million for the Teacher Baseline Salary Grant Program which increases baseline K-12 educator pay to $40,000 per year (participating schools no longer have a grant match requirement).
$32.5 million core funding increase for state higher education institutions – marking a nearly 30 percent increase during the Parson administration.
$10 million to invest in semiconductor production research, development, and skills training.
$4.2 million for Jobs for America's Graduates (JAG-Missouri).
$3.1 million for Missouri Youth Apprenticeships.

In his State of the State Address, Governor Parson also emphasized the need to support early childhood programs, asking the General Assembly to increase child care subsidy rates and continue funding Pre-Kindergarten for all 4-year-olds who are eligible for free and reduced lunch. The General Assembly agreed and funded Governor Parson's recommendations:

$56 million for public and charter schools to provide Pre-Kindergarten programs to all students qualifying for free and reduced lunch.
$54.8 million to increase rates for child care providers.
- Raising rates to the 100th percentile for infants and toddlers and to the 65th percentile for preschoolers and school-aged children.
$26 million for private child care providers to offer Pre-Kindergarten programs to students qualifying for free and reduced lunch.

Governor Parson is Missouri's agriculture governor. As a third-generation farmer who has maintained an active cow-calf operation throughout his public service career, including while serving as Missouri’s Governor, he has always kept fellow farmers and ranchers at the forefront. This year's budget continues support for Missouri's number one economic driver and improves the infrastructure necessary for farmers, ranchers, and rural Missourians to get their goods and services to market:

$100 million for Missouri's low-volume and lettered roads in rural areas.
$11.6 million for improvements at Missouri's river ports.
$5 million for Missouri River Flood Resiliency efforts.
$3.5 million for the Agriculture Resiliency Fund.
$182,000 for the enforcement of Executive Order 24-01, foreign ownership of land.

In order to put people first and increase opportunities for Missourians' success, state government must also look to continually improves. This year, Governor Parson is approving investments in state team members and needed upgrades in the services they provide to Missourians:

$134 million to maintain, repair, and renovate state facilities.
$111 million to provide a 3.2 percent salary increase for all state team members – marking a 27 percent pay increase during Governor Parson's administration.
- The pay plan also includes a one percent salary increase for every two years of service (capped at 10 percent) for certain DMH, MVC, DSS, DOC, DESE, OA, and Judiciary employees working in congregate care facilities.
$19.4 million for statewide technology upgrades.
$8 million for addressing behavioral health care and other health care staffing shortages.
$7.2 million for Maternal Mortality Prevention.

The Missouri FY25 state operating budget is approximately $50.5 billion, including $14.9 billion in general revenue. Additionally, Governor Parson issued 173 line-item vetoes, totaling $1 billion. To view the complete list of budget vetoes, click here.

"The use of the veto pen is not something I do eagerly, but today these vetoes represent the elimination of unnecessary pet projects and the protection of the taxpayer dime," Governor Parson said. "We may be leaving $1.9 billion on the bottom line, but that doesn't mean we spend for the sake of spending. I also remind legislators and the media that a fund balance does not always mean a surplus. We have obligations both this year and in future years that must be accounted for today to avoid future budgetary pains tomorrow."

The majority of Governor Parson's line-item vetoes center around four main factors:

Senate Bill 727 will cost the state an estimated $400 million more annually once fully implemented.
Necessary K-12 Foundation Formula increases are expected to cost $300 million over FY25 levels, beginning in FY26.
The General Assembly spent nearly $300 million more in general revenue over Governor Parson's FY25 recommendation.
The General Assembly grossly over appropriated Budget Stabilization Funds.

As of July 1, 2024, Missouri is expected to have a nearly $6 billion fund balance. However, fund balance does not equal surplus. A “surplus” suggests there are no plans for these funds, but in reality, more than 66 percent of Missouri’s fund balance has already been obligated for FY25 – meaning state government has approved spending plans that must be paid throughout the coming fiscal year. More information on Missouri's fund balance and ongoing revenue reductions and spending can be found in the PDF attachment.

To view the FY25 state operating budget bills, click here. To view an updated summary on Missouri's fund balance for FY25, see attached.