If officials in Washington don't reach a deal to avert the "fiscal cliff," Missouri could see a hit to its economy and budget.
The Federal Funds Information for States estimates Missouri could lose $1 billion of Defense Department spending on contracts and military institutions if federal spending cuts take effect in the new year.
The Washington-based organization estimates those automatic cuts also could result in a $125 million reduction in federal grants to state programs, such as public schools and early childhood programs.
State budget director Linda Luebbering says the expiration of federal tax cuts at the end of this year could cause some categories of Missouri tax revenues to rise and others to fall.
Congress and the White House are searching for an alternative deficit-reduction plan.