Whether it’s celebrating or saluting, July 4 is one of America’s biggest days. This Independence Day marks 250 years since 40 East Coasters decided to sever their colonies from English control. As an author and law professor, this Vietnam veteran and St. Paul resident knows a lot about U.S. history because for him, it’s family history.

JEFFERSON CITY, Mo. (KFVS) – Governor Mike Kehoe signed Missouri’s Fiscal Year 2027 operating and capital improvement budget bills Tuesday, approving a plan that totals $50.7 billion.

In a news release, Kehoe said the budget is balanced and focuses on what he called “smart and necessary investments” while protecting taxpayer dollars.

What’s in the FY27 budget?

The governor’s office said the FY27 operating budget totals about $49.8 billion after vetoes, including $15.7 billion in general revenue.

State leaders highlighted several funding priorities:

Public safety

• $2 billion for law enforcement and community safety initiatives
• Includes funding for Missouri Blue Shield grants, Operation Relentless Pursuit and law enforcement academy scholarships, among other items

Economic development

• $338 million for business growth and innovation
• Includes support for the Missouri Technology Corporation, a statewide apprenticeship program, Missouri One Start and a public-private-employee shared funding child care model

Agriculture

• $59.4 million for agriculture and rural communities
• Includes investments tied to infrastructure and programs, including low-volume roads and Missouri FFA

Education

• $9.8 billion for K-12 and higher education
• Includes funding for the K-12 education foundation formula and transportation, the Empowerment Scholarship Account Program, career and technical centers and higher education

Health care

• $24.8 billion to support Missourians with physical, developmental and behavioral health needs
• Includes funding for self-directed supports, outpatient competency restoration and Medicaid reform

Concern over one-time funding, FY28 gap

The governor’s office said lawmakers stayed largely within his recommended spending levels, but did so by using $179.1 million in one-time cash to cover ongoing costs.

The state is also facing a projected shortfall of more than $500 million in FY28, according to the release.

“State government doesn’t have a revenue problem, we have a spending problem, and continuing to spend faster than we grow our economy is not a sustainable path forward,” Kehoe said in the news release.

Vetoes and spending restrictions

To meet the constitutional requirement of a balanced budget, Kehoe issued:

• 65 vetoes totaling more than $30 million in general revenue
• 78 expenditure restrictions totaling $441.3 million, including $337.2 million in general revenue

The governor’s office said the vetoes and restrictions were largely tied to new projects, improper funding sources for new appropriations or an over-appropriation of various funds.

What’s next

Budget discussions are expected to continue as state officials look ahead to FY28 and the projected gap.

It could take years for the U.S. Supreme Court to resolve Nebraska’s water dispute with Colorado. But Attorney General Mike Hilgers said in the meantime, work on the Perkins County Canal should continue.

Hilgers’ comments on Tuesday came one day after the Supreme Court said it will consider Nebraska’s complaints that Colorado’s not sending enough water across the state line on the South Platte River and is blocking Nebraska’s attempt to build a canal to bring more. Hilgers said it could take three to five years for a special master to make a recommendation and the court to decide. And he said while it’s up to the Legislature, it would make sense to proceed with planning and construction on the canal.

“We need to be able to show the court, which is ultimately true, which is Nebraska is committed to doing this. I do see the policy wisdom, but even more importantly… from our perspective, it’s critical from a litigation perspective to really be able to push forward on this,” Hilgers said.

The Legislature has set aside $630 million for the canal. Separate from the court case, the Army Corps of Engineers must still decide whether to issue a permit for the project.