Missouri braces for budget squeeze as Kehoe unveils austere plan

Missouri's budget surplus is projected to be exhausted by the end of the next fiscal year, as Gov. Mike Kehoe unveiled a $54.5 billion plan with no new money for public schools, higher education, or state employee raises. The proposal would cut about $600 million in general revenue, rely on replacing about $1 billion in exhausted federal COVID relief funds, and offer limited spending increases—mostly a health-plan boost and a few targeted programs—while reviving a push to eliminate the state income tax via a voter referendum. Democrats warn the approach will shift costs to residents and threaten services, while Republicans tout spending restraint amid a shifting revenue outlook and Medicaid cost pressures.