State Fiscal Briefs

September 2021

Looking for Kansas data related to the pandemic? We have health, economic, and fiscal data on our new tool, How the COVID-19 Pandemic is Transforming State Budgets.

Kansas’s budget basics

According to the National Association of State Budget Officers (NASBO), Kansas’s total expenditures in fiscal year (FY) 2020 were $18.7 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Kansas’s combined state and local direct general expenditures were $26.9 billion in FY 2018 (the most recent year census data were available), or $9,248 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,801.

Kansas’s largest spending areas per capita were elementary and secondary education ($2,156) and health and hospitals ($1,452). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Kansas’s combined state and local general revenues were $28.3 billion in FY 2018, or $9,729 per capita. National per capita general revenues were $10,071. Kansas uses all major state and local taxes. Kansas’s largest sources of per capita revenue were charges ($2,257), such as state university tuition and highway tolls, and property taxes ($1,605).

Kansas’s politics

Governor Laura Kelly, a Democrat, was elected in 2018 with 48 percent of the vote. The next gubernatorial election is in 2022.

Kansas has a divided government. Republicans control both the House of Representatives (86 Republicans to 39 Democrats) and Senate (29 Republicans to 11 Democrats), with veto-proof majorities in both houses. All Kansas House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms, and their seats are on the ballot in 2024.

Kansas’s budget institutions, rules, and constraints

Kansas uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. There are no additional tax and expenditure limits. There are, however, limits on total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Kansas’s recent fiscal debates

  • In 2012, Kansas began a “tax experiment that, according to then-governor Sam Brownback, would be “a shot of adrenaline into the heart of the Kansas economy.” In short, the idea was that large individual income tax cuts (including eliminating taxes on pass-through income) would draw business and jobs to Kansas, boost economic growth, and grow tax revenue. The experiment failed. The state’s economic growth lagged the nation’s, and its tax revenue collapsed, which led to big budget deficits. In 2017, the state’s legislature passed legislation (overriding Governor Brownback’s veto) that raised income tax rates and restored the tax on pass-through income. But the experiment still looms over Kansas tax debates. Governor Kelly vetoed a tax cut in 2019, saying “the State of Kansas cannot afford to make a U-turn.” In response to this and other pressing tax issues (such as the state’s response to South Dakota v. Wayfair, Inc.), the governor issued an executive order establishing the Governor’s Council on Tax Reform, a state tax commission that will present tax recommendations in December 2020.
  • In August 2019, Governor Kelly signed an executive order ending a tax-break “border war” with neighboring Missouri. Under the order, the state will no longer offer tax incentives to businesses in Kansas City with hopes of luring them across state lines. A few months earlier, Missouri Governor Mike Parsons signed legislation (SB 182) promising Missouri would also stop using tax incentives to entice businesses to move across the border. Although tax incentives for economic development are often fraught policies, their use in Kansas and Missouri was particularly problematic because the states spent hundreds of millions on tax breaks merely so business would move a few blocks within the same metro area.
  • In 2010, a group of parents and students sued the state, arguing the state’s education spending was not meeting the state’s constitutional guarantee of adequate and equitable school funding (Gannon v. State of Kansas). The aftermath of the Great Recession and Kansas’s large tax cuts only exacerbated the spending deficit. In 2019, however, the Kansas Supreme Court ruled that increasing education appropriations in the FY 2020 budget was enough to meet the state’s constitutional responsibilities. However, the court declined to end the decades-long lawsuit and will continue to monitor the legislature and future budget decisions.

Kansas’s current budget

Governor Kelly released her FY 2021 budget proposal in January 2020. The proposal included $7.9 billion in general-fund spending, a roughly 1 percent increase from FY 2020. The budget proposal was centered around restoring fiscal stability, including paying down the state’s debt.

Kansas enacted its FY 2021 budget in March 2020. The enacted budget included $8.0 billion in general-fund spending, which is a $100 million increase from the governor’s proposal and a 3 percent increase over enacted FY 2020 spending. In April, however, the state’s revenue estimates were reduced and Governor Kelly announced $704 million in spending cuts for FY 2021.

Governor Kelly released her FY 2022 budget and gave her State of the State address in January 2021. In her address, the governor said that “because Kansas prioritized wisely and found new efficiencies,” the state had balanced the previous year’s budget without tax increases. However, Kelly warned that such modest fiscal success should not encourage Republicans in the legislature (who have substantial majorities in both the House and Senate) to push for new tax cuts. The governor’s budget includes expanding the state’s general sales tax to digital goods (e.g., digital books and streaming services) and “marketplace facilitator” transactions (i.e., third-party sales on websites like Amazon). Governor Kelly’s budget proposes $8.0 billion for FY 2022, roughly as much as she proposed for FY 2021 before the pandemic.

For more on Kansas’s budget, see