Gov. Mike Kehoe holds to tax cut pledge

By Rudi Keller, Missouri Independent
Posted 1/30/25

The Missouri state budget will be tighter in coming years as the state finishes spending federal aid distributed for recovery from the COVID pandemic, but Gov. Mike Kehoe said recently he remains …

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Gov. Mike Kehoe holds to tax cut pledge

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The Missouri state budget will be tighter in coming years as the state finishes spending federal aid distributed for recovery from the COVID pandemic, but Gov. Mike Kehoe said recently he remains committed to his promise to end the state income tax.

Speaking to editors and publishers attending the Missouri Press Association Day at the Capitol, Kehoe said one of his priorities for cutting taxes this year is to exempt capital gains — the profits from sale of investments like a business or stocks. Eliminating the income tax, he said, will be a long-term project.

“None of the big picture ones, especially the income tax, which is the biggest, can be a light switch,” Kehoe said. “It’s got to be something that’s responsible, that funds essential services, but ultimately has the end goal.”

About 65% of Missouri’s $13.4 billion in annual general revenue comes from the personal income tax. Exempting capital gains, a proposal that was the first tax cut bill debated in a committee hearing this year, would reduce revenue by about $300 million annually.

The entire state budget, $51.6 billion, includes about $24.4 billion in federal aid for programs like Medicaid, highway construction and education.

The federal portion includes about $2 billion that remained in state accounts from the 2021 American Rescue Plan Act, money that must be spent by the end of 2026.

Kehoe, who was inaugurated Jan. 13, presented his budget and legislative priorities on Jan. 28 with the annual State of the State Address. The session with editors and publishers, held during a luncheon at the Governor’s Mansion, was the first time he’s taken questions from the media since taking office.

Along with the budget, Kehoe said the State of the State speech would focus on four areas — agriculture, economic development, vocational education and law enforcement. Adding investments to support those needs, he said, will be tough with a budget that has little overall growth and must make room for tax cuts.

“It will be a balance,” Kehoe said. “It will not be easy, but it’s still something we’re very committed to continue to do.”

He said the speech will also address actions Kehoe wants to limit the impact of Amendment 3, which made abortion legal in Missouri up to the point of fetal viability.

“You will hear a lot about our belief that we should protect innocent life,” Kehoe said. “We said through the campaign, if Amendment 3 were passed, which we were very much 100% against, that we were going to put our hand on the Bible, and say we would protect the Constitution, but we’re going to always look for ways to protect innocent life.”

Under questioning from the journalists, Kehoe said he has been considering how to package state support for new or improved stadiums to house the Kansas City Chiefs and Kansas City Royals.

Kansas City voters in April defeated a sales tax extension that would have supported plans for new stadiums and Kansas has enacted legislation offering big incentives if the teams hop the state line.

“I’m not a fan of just throwing money at stadiums, but I’m a fan of keeping the economic activity that those two teams provide, and we’re going to continue to work and put our best foot forward to make sure they stay,” Kehoe said.

Kehoe also said he doesn’t support legislation to create an independent ombudsman and oversight committee for the Department of Corrections. The prison system has seen historically high numbers of deaths among people in custody, complaints about health care for incarcerated people and high turnover among corrections officers.

He has confidence in Trevor Foley, his nominee to be director of the department. Foley has been acting director for 15 months and sees no need for a new layer of oversight, Kehoe said.

“I believe he has it on the right path right now,” Kehoe said.

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