Governor Mike Kehoe has announced that Missouri’s state budget will be tighter in the coming years as the state finishes spending federal aid distributed for COVID-19 recovery. Despite these challenges, Kehoe remains committed to his promise to eliminate the state income tax.
Speaking to editors and publishers at the Missouri Press Association Day at the Capitol, Kehoe highlighted one of his main priorities for this year: exempting capital gains, which are the profits earned from investments like businesses or stocks. He noted that eliminating the income tax will be a long-term goal, and this process can’t be rushed.
Kehoe explained that changes to the state’s tax system, especially the income tax, can’t happen overnight. It will require careful planning to ensure essential services are still funded while working toward the eventual goal of eliminating the tax.
Personal income tax makes up about 65% of Missouri’s $13.4 billion in annual general revenue, so exempting capital gains will impact the state’s revenue. This proposal, which is the first tax cut bill debated this year, could reduce revenue by about $300 million each year.
Missouri’s total state budget for this year is $51.6 billion, which includes around $24.4 billion in federal aid for essential programs like Medicaid, highway construction, and education. Kehoe noted that a portion of this federal aid, approximately $2 billion from the American Rescue Plan Act passed in 2021, must be spent by the end of 2026. This adds further pressure on the state budget, making it more challenging to manage and invest in key sectors.
Kehoe, who was inaugurated as governor on January 13, will deliver his State of the State address on Tuesday, where he will outline his budget and legislative priorities. The address will focus on four main areas: agriculture, economic development, vocational education, and law enforcement.
Kehoe acknowledged that adding investments to support these sectors will be tough with a budget that has limited growth, particularly as he also looks to make room for tax cuts.
In his address, Kehoe will also address his plans to limit the impact of Amendment 3, which legalized abortion in Missouri up until fetal viability. Kehoe emphasized his belief in protecting innocent life and reiterated his commitment to defending the Missouri Constitution, even if it means seeking ways to restrict abortion access further.
Regarding stadiums for the Kansas City Chiefs and Kansas City Royals, Kehoe shared that he is considering how the state can support new or improved stadiums to keep these major teams in Missouri. In April, Kansas City voters rejected a sales tax extension that would have funded new stadiums, while Kansas has passed legislation offering incentives for the teams to relocate.
Although Kehoe is not in favor of simply throwing money at stadium projects, he stressed the importance of keeping the economic activity generated by the teams in Missouri.
Kehoe also addressed the prison system, expressing his confidence in his nominee for the Department of Corrections, Trevor Foley, who has served as acting director for 15 months. Despite concerns about high turnover among corrections officers and issues with healthcare for incarcerated people, Kehoe does not support creating an independent ombudsman or oversight committee for the department. He believes Foley is on the right path to address these issues without adding more layers of oversight.
Earlier in the day, members of the press association also met with newly inaugurated Secretary of State Denny Hoskins, Lt. Gov. David Wasinger, and House Speaker Jon Patterson. Hoskins, who campaigned on the idea of hand-counting ballots in elections, expressed doubt that lawmakers would support such a measure.
However, he was optimistic about the legislature passing laws to enforce the provision of Amendment 7, which mandates that only U.S. citizens can vote in Missouri elections. Hoskins noted that any such legislation would likely face legal challenges, particularly regarding how citizenship will be verified.
Patterson, who was briefed on Kehoe’s plans for the State of the State speech, mentioned that there is still no consensus among Republicans on how to revise the provisions of Amendment 3. He acknowledged that any changes to abortion laws will need to have the support of voters, as Missouri’s electorate has already spoken on the issue.
One aspect that sets Kehoe apart from previous governors is his active engagement with lawmakers. Kehoe has made a point to visit legislative offices and build relationships with lawmakers to help push his agenda forward.
House Speaker Patterson praised this approach, noting that the success of any initiative in the state capital depends on relationships, and Kehoe’s efforts to connect with legislators will be valuable as he works to move his policies through the statehouse.
Kehoe stated that he plans to visit lawmakers every day during the legislative session. While this may be a shock to some, as previous governors have not taken such a hands-on approach, Kehoe believes it will foster more direct and productive conversations with legislators, ultimately helping to achieve his goals for Missouri.
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