Gov. Laura Kelly revealed her proposed blueprint Thursday for $7.8 billion in government spending on state services next year, including social service investments, aid for higher education and a pay raise for state employees.
The Democratic governor again asked lawmakers to lower state contributions to the Kansas Public Employees Retirement System by extending payments for 10 years and adding $4.4 billion in interest payments, a proposal met with swift condemnation by her Republican adversaries.
Republicans also scoffed at Kelly's ideas for providing $53.2 million in credits to low-income families for sales tax assessed on food and placing $54 million in a defunct program that lessens the burden of local property taxes.
Budget director Larry Campbell presented legislators with an overview of the budget, which would leave $627.8 million, or 8%, in the state general fund for the following year.
The budget includes funding for Medicaid expansion, highway projects, early debt payments, additional prison beds, and Kansas Highway Patrol helicopters. Classified and unclassified state employees, excluding the judicial branch and Legislature, would get a 2.5% pay increase for a cost of $11.3 million.
Revenues are supported in Kelly's plan by applying the state sales tax to digital products and online merchants.
"As I've heard the governor say, this is just the beginning," Campbell said. "We're playing chess, not checkers."
Campbell outlined the argument for lowering pension costs through a process known as reamortization, a proposal floated by Kelly and overwhelmingly defeated a year ago.
Between 2010 and 2017, the state missed 11 payments to KPERS, Campbell said, and additional payments almost certainly will be missed as annual payments increase in the next few years. The current schedule calls for legacy debt to be paid off in 15 years.
Refinancing of KPERS would spread those payments over a 25-year period. The process doesn't affect retiree benefits.
Republicans remain unenthusiastic about the idea, which Senate Majority Leader Jim Denning, R-Overland Park, compared to "pushing a rope — just not going to happen."
"Her budget is significantly out of balance, and she's covering it up with the KPERS reamortization number," Denning said.
Senate Minority Leader Anthony Hensley, D-Topeka, made a distinction between Kelly's budget proposal and fiscal chaos that stemmed from former Republican Gov. Sam Brownback.
“Her priorities continue to support hardworking Kansans rather than a reckless ideological agenda," Hensley said. "She is turning our attention to important issues, such as access to affordable health care, higher education and transportation. We can also focus on increasing pay for state employees and protecting their retirement benefits now and into the future — all the while maintaining a strong ending balance and not raising taxes.”
Kelly's budget would provide food sales tax credits for individuals earning less than $30,000 or households with less than $40,000 in annual income. Individuals would get $60, and a married couple would get $240.
Property tax relief would be funneled into the Local Ad Valorem Tax Reduction Fund, which hasn't been used since 2003. The program would provide $25 in relief for the owner of a $150,000 home.
Denning said Republicans would offer competing proposals for tax relief.
"We'll take a whole different approach," Denning said. "That's old-school thinking. We know we need to give food sales tax relief, and we'll give it another shot, taking care of the whole problem, not just a small problem."
Kelly's budget would provide $21.8 million in new funding for an array of programs that would be housed under the new Department of Human Services, including more state hospital beds, adoption assistance and child protective services.
The new agency would reorganize the Kansas Department for Aging and Disability Services, Department for Children and Families, and juvenile services programs currently administered by the Department of Corrections.
Rep. Barbara Ballard, D-Lawrence, said the unification of social services would provide better efficiency.
"There's a whole lot that has to happen to help the foster care crisis because we have just increased unbelievably, and I think we have to get a handle on that," Ballard said. "This may be one way that we can monitor it better."
For higher education, Kelly's plan would provide $5 million in new aid for low-income students, a $14.8 million block grant for universities, and $8.5 million for tech schools.
The infusion of $7.2 million into state prisons in Winfield and Lansing would pay for hundreds of new beds to address overcrowding, as well as a substance abuse treatment program.
A $14.5 million allotment for the Kansas Highway Patrol would buy two helicopters and an additional aircraft, as well as infrared equipment.
Kelly's budget would lessen the annual sweep of cash from the state highway fund with a goal of phasing out the practice by 2022.
Rep. Troy Waymaster, R-Bunker Hill, said the Legislature would adopt a comprehensive transportation plan this session to replace the expired T-Works program. However, he called for an immediate end to the cash sweeps from the Kansas Department of Transportation and joined Republican colleagues in suggesting Kelly was closing the "bank of KDOT" by turning the pension fund into a bank account.
"I think that's a very valid comparison," Waymaster said. "We're just shifting money around and trying to get the savings by reamortizing KPERS, as opposed to having a transfer that should be going to the Kansas Department of Transportation, which we need to fund the next transportation plan."