Governor Laura Kelley’s plan keeps promises to Kansas schools, expands affordable healthcare, pays over $600 million in debt, provides property, food sales tax relief

 

Topeka, Kan. — The second budget recommendation offered by Governor Laura Kelly delivers on her continued commitment to rebuilding Kansas after a decade of crisis. It maintains funding for Kansas public schools, includes funding to expand Medicaid, continues to phase out the “Bank of KDOT,” pays over $600 million in debt and provides over $117 million in commonsense tax relief.

 

“Kansas has made tremendous strides in recovering from the last decade of fiscal chaos,” Kelly said. “This balanced budget builds on that progress and positions Kansas to begin a new decade of shared prosperity and growth. I look forward to input from lawmakers and working with them to enact it.”

 

Kelly’s budget restores fundamental principles of Kansas fiscal responsibility:

 

• • Achieves Structural Balance: The Governor’s Budget Recommendation maintains structural balance, ensuring that state expenditures do not exceed revenues. It also meaningfully reduces the state’s irresponsible reliance on one-time funds.

 

• • Rebuilds State Savings: The Kelly Budget includes a statutorily required ending balance totaling $627.8 million. The 8.0 percent ending balance exceeds the amount required by law, a reflection of Gov. Kelly’s commitment to fiscal discipline.

 

• • Reduces State Debt: The Kelly budget retires $602.5 million of debt in FY 2020. This includes fully repaying the $264.3 million balance of the loan issued in calendar year 2017 from the Pooled Money Investment Board. It also pays off the $69.8 million balance of IMPACT bonds at the Department of Commerce. Paying $268.4 million will eliminate KPERS layering payments that resulted from skipping normal contributions to the system in FY 2017 and FY 2019. Altogether, paying these debts early saves an estimated $212.6 million in interest, as well as freeing up the related debt payments in future years.

 

Additionally, the Kelly budget accomplishes critical policy goals:

 

• • Keeps Funding Promise to Kansas Schools: In June 2019, the Kansas Supreme Court unanimously ruled that Kansas had enacted a plan that fulfills the state’s constitutional obligation to adequately and fairly fund public schools. The Court endorsed the 2019 proposal offered by Governor Kelly and approved by the Legislature, which increases investment in education by roughly $90 million a year, accounting for inflationary increases at the rate of 1.44 percent through FY 2023. The Governor fully funded this plan in the FY 2021 budget, putting Kansas on track to increase school funding by $431.1 million through FY 2023.

 

• • Medicaid Expansion: The Governor’s recommendation includes $17.5 million to expand KanCare, the state’s Medicaid program. Expanding eligibility for the program will allow 150,000 low-income Kansans to access critical health-care coverage. This will not only improve the health and vitality of Kansas communities, information presented at the Governor’s Council on Medicaid Expansion showed that expanding Medicaid could also create new jobs across the state. 

 

• • Closing the “Bank of KDOT”: Since taking office, Kelly has restored investment in Kansas roads and bridges by $213 million. This budget reduces State Highway Fund transfers by an additional $73.1 million in FY 2021. Assuming state revenues remain stable, this will keep Kansas on track to fully close the “Bank of KDOT” by the end of the Governor’s first term. This will enable Kansas to fulfill the promises of T-WORKS and also enact a new transportation plan in FY 2021 without a tax increase.

 

• • Targeted Food Sales Tax Relief: The Governor’s tax policy recommendations provide food sales tax and property tax relief, and level the playing field by modernizing antiquated sales tax laws. Replacing the current non-refundable food sales tax credit with a new refundable food sales tax credit will provide $53.2 million in food sales tax relief beginning in tax year 2020.  Repealing the current non-refundable food sales tax credit after December 31, 2019, will save approximately $10 million in SGF receipts in FY 2021. Under the Governor’s proposal, the Department of Revenue estimates that more than 540,000 tax filers will claim $63.2 million in refundable food sales tax credits beginning in FY 2021.

 

• • Property Tax Relief: The Governor has also prioritized property tax relief. For the first time since 2003, resuming the State General Fund transfers to the Local Ad Valorem Tax Reduction Fund is included in the Governor’s budget recommendation. This will provide $54.0 million in local property tax relief beginning in FY 2021.

 

• • Public Safety: To address the growing overpopulation issue in our prisons, the Governor recommends expanding bed capacity and treatment capacity by renovating unoccupied buildings near the Winfield Correctional Facility and the Lansing Correctional Facility. These renovated facilities will add dedicated substance use treatment beds for offenders who need it, as well as adding capacity for geriatric care for aging and seriously ill inmates.

 

“I appreciate the bipartisan collaboration between the Executive and Legislative branches throughout the last year to rebuild Kansas after a decade of crisis,” Kelly said. “This budget will help ensure our progress. It honors all the funding promises made by the 2019 Legislature, continues to sustainably and fairly re-invest in Kansas communities and provides much-needed tax relief in the form of a food sales tax rebate and property tax cuts. I am confident that if we work together to enact this commonsense agenda, Kansas will undoubtedly begin the new decade strongly positioned to prosper and grow.”

The Governor’s full budget recommendation can be viewed here.