Lt. Gov. Mike Kehoe presents his budget requests to the Missouri House Budget Committee on Wednesday, Feb. 7, 2024. (Rudi Keller/Missouri Independent)
Missouri is heading toward its first fiscal year with declining revenue in more than a decade — and the first in living memory during a growing economy — according to the latest estimate of state tax revenue.
General revenue for the fiscal year that ends June 30 will total $13.35 billion, a decrease of about $70 million from the record $13.42 billion collected in fiscal 2024, according to a news release Wednesday from Gov.-elect Mike Kehoe.
That is a decline of about 0.6%, which is nearly identical to the actual year-to-date revenue receipts. Through Tuesday, revenues have declined 0.7% year-to-date.
Revenues should rebound in the following year, the release stated. The estimate agreed on by the state Office of Budget and Planning and the appropriations staff for the Missouri House and Senate anticipates growth of about 1.6%, which would produce $13.56 billion in general revenue for Kehoe’s first full fiscal year in office.
“I appreciate House and Senate leadership, our state budget team, and other state partners for helping develop this year’s revenue estimate to inform our budget for next year,” Kehoe said in the news release. “I look forward to working with the legislature on a conservative, balanced budget this upcoming session.”
The annual consensus revenue estimate is used by the governor and legislative leaders to build and balance Missouri’s budget.
The budget for the current fiscal year is based on an estimate made in December 2023 of $13.2 billion in new revenue. The budget plan adopted by lawmakers for the current year also anticipated spending about $1.9 billion from accumulated surpluses.
Higher-than-expected revenue for the year that ended in June is why Missouri should receive more than originally estimated, despite a decline in tax receipts, and use less of the available surplus.
Kehoe will present his budget in late January and it will be the first indication how he intends to use the historically high surpluses in the state treasury.
At the end of November, the general revenue fund balance stood at $3.9 billion, down about $900 million from the balance on June 30 but far more than any other new governor has ever enjoyed. There is almost $4 billion more in funds that can be spent like general revenue, with about half of that in accounts dedicated to projects like widening Interstate 70 and expanding the Capitol Building.
The surplus was built with double-digit revenue growth over a two-year period that ended in early 2023 amid slower economic growth and the implementation of state tax cuts.
Kehoe has promised additional tax cuts, with an aim to eliminate the state income tax. Several lawmakers have filed bills to implement a flat 4% tax rate as the first step in that plan.
Legislative budget leaders said in the news release that they are happy with the consensus estimate for the coming year.
“There are big issues on the horizon,” said state Rep. Dirk Deaton, a Republican from Noel who is vice-chairman of the House Budget Committee. “I look forward to continuing to work with my colleagues in the House, the Senate, and Governor-Elect Kehoe on crafting a fiscally responsible FY26 budget.”
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