The Missouri House of Representative’s – stuck in Jefferson City for the extraordinary session to assist struggling billionaires – brought in the state’s budget guy for a talk.
It did not go well.
Per the Missouri Independent [End of multi-billion Missouri fiscal surplus is near, budget director says • Missouri Independent ], a couple of years back Missouri had around $8 billion in reserves. By the end of June 2026 that balance will be $600 million or less.
In other words, for years Missouri spent more than it collected from taxpayers and Washington, D.C.
Of course, the Republican supermajority knew that the nest egg has been leaking yolk. Despite that, this past session they voted to collect at least $200 million a year less in revenue by eliminating the state tax on capital gains. In recent years they’ve also lowered the income tax rate, and, handed out a score of special tax breaks.
Still, the members listening to budget director Dan Haug’s projections acted surprised.
Boy, they’re going to hate the next few weeks.
Friends in Washington, D.C. expect the United States Senate to tweak the Big Beautiful Bill for appearance’s sake, with around 95% of the House passed mess becoming law. This will cost Missouri a lot of money.
The budget director expects the coming reductions in SNAP (food stamps) to add around $400 million a year to Missouri’s budget expenditures. That may be correct for just the direct BBB costs. More likely, the state will have to spend around $650 million.
Missouri might have the worst run food stamp program in America. The Department of Social Services still needs to hire staff, update computers and improve procedures to comply with a federal court decision about violations of the Americans With Disability Act and food stamp law. The computer improvements commissioned by Governor Matt Blunt have yet to be implemented. When those required improvements are made, well, the good news is that more people will be able to access the program. The bad news is that increases Missouri’s cost. And, lets not forget that even a minor Economic Downturn (does that really sound better than Recession?) will cause a spike in the number eligible for food stamps. So, perhaps the current 650,000 participants could jump to 800,000 citizens (or, from just over1 in 10 to 1 in 8 Missourians). The numbers have been that high before. They could quickly get there again.
Now, for the Missouri GOP the elephant in the room is Medicaid costs. That BBB dramatically lowers how much Washington will pay to care for 1.3 million Missourians. For example, under the Obama rules 90% of the cost of :Medicaid Expansion” got paid by the feds. That changes. So too do a number of wonky calculations related to Medicaid. Remember, we think of Medicaid – aka MO HealthNet – as a single entity. In reality it is a bunch of related components, each with its own rules and payment systems, for kids, disabled folks, seniors, legal refugees and such.
The final numbers aren’t available. The inside Washington interpretations point of Missouri having to cover $3.5 billion a year more in Medicaid costs. (The total cost of MO HealthNet roars over $13 billion a year, with most of that coming from Washington.) To twist the knife a bit more, the BBB targets “provider taxes,” now called “Mediscams.” In Missouri, and a bunch of other states, health care providers pay a special tax. The state uses that money to claim more federal Medicaid money. Think of it as paying for one Hershey Bar and getting two handed to you. That scheme yields a lot of money for Missouri, now.
Oh, you expect Senator Josh Hawley (R – MO) to stop Medicaid and Medicare cuts as he promised? The betting line has Hawley voting for the BBB as presented on the Senate floor because he doesn’t want to buck Donald Trump nor dim his chances at being a 2028 Republican presidential candidate. What’s best for Missouri probably won’t be what’s best for Josh.
The BBB has a lot of other cuts to luxuries such as education for special kids, support for national parks and a lot of other stuff the media doesn’t have time to cover.
The end result is that the Republican-led Missouri legislature will face a budget disaster in the next year.
How will they respond? Based on their history, they’ll push more tax cuts for rich people.
Glenn Koenen