Kansas

State Fiscal Briefs

March 2020

Kansas’s budget basics

According to the National Association of State Budget Officers (NASBO), Kansas’s total expenditures in fiscal year (FY) 2019 were $17.2 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 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 2017 (the most recent year census data were available), or $9,245 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 $9,449.

Kansas’s largest spending areas per capita were elementary and secondary education ($2,070) and health and hospitals ($1,456). 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 $26.8 billion in FY 2017, or $9,192 per capita. National per capita general revenues were $9,573. Kansas uses all major state and local taxes. Kansas’s largest sources of per capita revenue were charges ($2,248), such as state university tuition and highway tolls, and property taxes ($1,552).

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 (84 Republicans to 41 Democrats) and Senate (28 Republicans to 11 Democrats and 1 independent), with veto-proof majorities in both houses. All Kansas House seats are on the ballot in 2020 because representatives serve two-year terms. Senators serve four-year terms, and their seats are on the ballot in 2020.

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 Laura Kelly released her proposed FY 2020 budget in January 2019. In both a presentation and press release announcing the budget, Governor Kelly stressed “budget stability,” arguing her proposal brought expenditures and revenues in line without tax increases or one-time funds and that it increased the state’s savings and reduced its debt. In her 2019 state of the state address, Kelly also advocated for K–12 education spending increases (specifically to address a lawsuit over the state’s school funding) and for her proposal to expand Medicaid under the Affordable Care Act.

The legislature passed its budget in May 2019. The budget generally followed the governor’s recommendations, including on increased funding for education programs (although not at the governor’s levels) without any tax increases. But the enacted budget differed in one significant way from the governor’s proposals: the legislature did not adopt the governor’s proposed Medicaid expansion.

Governor Kelly gave her 2020 state of the state address in January 2020.

For more on Kansas’s budget, see