Budget Is Balanced, Responsibly Cuts Taxes, Fully Funds Schools

TOPEKA – Governor Laura Kelly on Jan 12th, announced her annual budget, outlining her common-sense, fiscally responsible plan to provide tax relief for Kansans, fully fund schools for the fifth year in a row, and make one-time investments that will pay off debts and expand healthcare.

“My budget reflects my plan to responsibly cut taxes, continue growing our economy, fully fund education, and strengthen our infrastructure and workforce,” Governor Laura Kelly said. “We’re building a better Kansas for working families and retirees -- all while maintaining a balanced budget.”

The budget:

• Provides responsible tax relief: Governor Kelly’s “Axing Your Taxes” plan will save Kansans more than $500 million in tax cuts over the next three years. The plan includes a proposal to completely axe the state sales tax on groceries, diapers, and feminine hygiene products by April 1, 2023. The second proposal adds a four-day back-to-school sales tax holiday, and the third increases the exemption on Social Security income tax to provide tax relief for retirees.

“Let’s pass tax cuts that we can afford and help working families and seniors – while allowing us to continue the progress we’ve made on education,” said Governor Kelly.

• Fully funds schools for the fifth year in a row: The Governor’s budget fully funds K-12 schools for the fifth consecutive year and puts Kansas on the path to fully fund special education. The budget also invests nearly $110 million in higher education, allowing schools to continue the recent trend of low-to-no tuition increases and expand financial aid.

“The special education funding gap impacts every student because schools end up diverting funds away from other areas to provide these services,” said Governor Kelly. “I fully recognize that Congress hasn’t done its part to deliver the federal funding it promised for special education services, and I’ll continue to work with our congressional delegation to push the federal government to hold up it is end of the bargain. But in the meantime, Kansas families need solutions.”

• Prepares Kansas for the future: The Governor’s budget adds $500 million to the Rainy Day Fund, putting the balance at $1.5 billion. When Governor Kelly first came into office, the Rainy Day Fund was empty. Now Kansas is in a much better position to weather future storms.
• Invests in stronger infrastructure: The Governor’s Budget keeps the ‘Bank of KDOT’ closed for the second year in a row and adds $220 million to the state’s “Infrastructure Leveraging Fund” so that local communities can have the state and local matching funds they need to access federal funding for transportation, broadband, and water infrastructure upgrades.
• Saves taxpayers money by paying off debt: By paying off the remaining $53 million for reservoir debts at Milford and Perry Lakes, Governor Kelly’s budget will save taxpayers nearly $30 million in future interest payments. The budget also pays in cash for the state’s share of the proposed new veterans home in Topeka – saving close to $10 million in interest.
• Invests in Kansas workers: The Governor’s budget ramps up funding for the recently formed Office of Registered Apprenticeship and invests in a college internship program to encourage the next generation of Kansans to stay in the state post-graduation.

"As Kansas aims to continue shattering economic records, there's one thing in our way: There aren't enough skilled workers for all the jobs we're creating. Our labor shortages are driving up prices and stunting our economic growth," said Governor Kelly. "These investments will help create a strong pipeline of talent that has abundant educational and economic opportunities right here at home."

• Continues to repair Kansas’ foster care system: The Governor’s budget invests over $5 million to increase placement rates for foster homes and support foster kids transitioning to adulthood.
• Expands mental and physical healthcare and saves Kansas hospitals: The Governor’s budget directs over $12 million to the current KanCare program to eliminate disparities in service for KanCare program recipients, enhances the ability to secure providers, and expands network capacity. The budget also shows why Kansas must expand Medicaid. Kansas will receive an estimated $370-$450 million in additional federal funding over the next two years when we expand Medicaid – which would cover the state’s share of expansion for eight years.

“By far, the most impactful thing we could do to improve Kansans’ health, keep our healthcare workers, and save rural hospitals is expand Medicaid and draw down billions of dollars – our own tax dollars – waiting for us in Washington, D.C.,” said Governor Kelly.

• Increases state employee pay by 5%: The Governor’s budget works to recruit and retain state workers by increasing pay and maintaining the Career Progression Plan for Kansas Highway Patrol officers that was provided in last year’s budget.
• Makes investments in housing and childcare: The Governor’s budget invests in early childhood education and care, giving local communities the ability to implement solutions tailored to their needs. It also provides $20 million to the Housing Revolving Loan Program to help expand housing stock across the state, especially in rural Kansas.
• Invests in IT infrastructure and cybersecurity: The Governor’s budget works to modernize and protect IT systems across state government and provide additional IT support and cybersecurity measures at state agencies.

View the Governor’s full budget recommendations here.