Kansas state budget (2012-2013)

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The enacted fiscal year 2013 state budget can be accessed here.

Lawmakers in the Kansas state legislature approved a $13.41 billion fiscal year 2013 state budget on May 20, 2012.[1] The budget increased state general fund spending, primarily state taxpayer money, by approximately 0.7 percent over fiscal year 2012. It was written to include a 7.5 percent ending balance that could be tapped by lawmakers in the event that the new tax cut failed to promote sufficient growth.[2]

Highlights of the budget included:

  • Income tax cuts[2]
  • A $40 million increase in funding for K-12 education, approximately $60 per student[2]

Gov. Sam Brownback signed the budget into law on June 1, 2012, saying that the budget reduced overall state spending by $465 million.[3] He used his line-item veto on several items, including $800,000 for local environmental programs, $484,337 for teacher mentoring programs and funding to promote the state fair.[4]

Tax cuts

In July 2012, the governor said that the state could afford his tax cuts, but members of both parties disagreed with the governor's assessment, noting that projections from the nonpartisan Legislative Research Department showed cumulative shortfalls over five years exceeding $2.5 billion.[5][6]

On May 23, 2012, the governor signed into law the tax bill that cut state income taxes by roughly $3.7 billion over five years.[7] In addition to cutting individual income tax rates for 2013, the cuts eliminated income taxes for the owners of 191,000 businesses.[8]

The law collapsed the state's three-bracket system to two brackets starting in 2013. It cut the highest income tax rates to 4.9 percent from 6.45 percent and 6.25 percent. It also reduced the lowest tax rate to three percent from 3.5 percent.[7]

The tax cuts passed despite projections from the nonpartisan Legislative Research Department showing a budget shortfall by July 2014 and cumulative shortfalls over five years exceeding $2.5 billion.[8]

Governor's proposed budget

On January 12, 2012, Gov. Sam Brownback proposed the fiscal year 2013 state budget, which can be accessed here. Under the governor's proposal, the state would spend just under $6.1 billion from the general fund. The budget would leave cash reserves of $465 million at the end of the fiscal year.[9] Overall state spending, including spending financed with federal funds, would be $14.1 fiscal year 2012.[9]

The governor also proposed redesigning the state's income tax system by cutting individual income tax rates but eliminating tax credits and deductions.[9] The governor's plan lowered the individual income tax rate from 6.45 percent to 4.9 percent.[10] Brownback would cut the bottom tax bracket to three percent and eliminate individual state tax on most small-business income.[11] The cuts would be offset by a slight increase in the sales tax rate and a broadening of the tax base.[12]

The governor also endorsed a proposal to use revenues from state-owned casinos to bolster the long-term financial health of the Kansas Public Employees Retirement System. The proposal passed the House in a larger bill aimed at shoring up KPERS.[13]

The governor's budget report can be accessed here.

Legislative proposed budget

It appeared a deal had been reached on March 30, 2012, which would have cut overall spending by 4.2 percent, or about $620 million, and left the state with cash reserves of $523 million at the end of June 2013, but it did not last. House Republican leaders canceled a vote on the deal and reopened budget discussions after the legislation did not match the agreement they had reached, especially in regard to K-12 school funding. Lawmakers then adjourned for their spring break, meaning that the budget would be unresolved until lawmakers returned on April 25 to conclude the year.[14]

When the conference committee failed to reach a budget deal in March, lawmakers did not approve a $1.4 million supplemental appropriation for the judicial branch. As a result, Kansas Supreme Court Chief Justice Lawton Nuss said that state courts would have to close for five days, with 1,500 workers being furloughed on those days.[15]

The Senate passed a $14.4 billion budget by a vote of 34-5.[16] Highlights of the Senate budget included:

  • Adding $50 million to increase base state aid for schools,
  • Adding $27 million to equalize school aid payments among poorer districts,
  • Adding $5 million to reduce waiting lists for services for residents with physical and developmental disabilities,
  • Adding $45 million a year for four budget years for cities and counties to reduce property taxes.[16]

The House approved the proposed $14.1 billion state budget on March 19, 2012.[17] It cut spending by $600 million, or four percent. The budget was very similar to that proposed by the governor, although lawmakers added in $25 million for education and $5 million for community mental health centers. That $25 million would come from a Kansas Department of Transportation highway program to help K-12 public schools deal with higher-than-expected student enrollment.[17] The House budget included provisions barring Insurance Commissioner Sandy Praeger from spending about $1.2 million in federal grant dollars her agency received to help plan for a health insurance exchange as required to be established by 2014 by the Affordable Care Act.[18]

The State Senate approved a $14 billion fiscal year 2013 state budget bill on March 21, 2012. It reduced state spending by four percent, or $572 million.[19] The Senate's budget provided $8.5 million for the fourth year of a scheduled five-year program to improve salaries of state employees with wages far below similar jobs in the private sector, whereas the House's budget did not include funding for that salary increase.[19]

"Rainy day fund"

Members of the Senate proposed a constitutional amendment that would create a rainy day fund. The state would be required to deposit up to one percent of its budget into the account when the state has a year-end balance of three percent or more. The state would no longer have to make deposits when the account reaches 15 percent of the previous year’s tax revenue. When necessary, the state would be allowed to draw only enough money to equal the year’s projected budget shortfall.[20]

References

  1. The Kansas City Star, "Kansas legislature sends $14.3 billion budget to governor," May 20, 2012
  2. 2.0 2.1 2.2 The Wichita Eagle, "With tax cuts and budget deal, Kansas Legislature finishes session," May 20, 2012
  3. The Hutchinson News, "Brownback signs 2013 Kansas budget," June 1, 2012
  4. The Kansas City Business Journal, "Brownback signs $14B Kansas budget, vetoes some items," June 1, 2012
  5. The Kansas City Star, "Brownback says Kansas finances are sound, but others disagree," July 25, 2012
  6. The Wichita Eagle, "Many doubt Brownback on taxes, budget," July 27, 2012
  7. 7.0 7.1 Kansas City Star Midwest Democracy, "Brownback signs big tax cut in Kansas," May 23, 2012
  8. 8.0 8.1 Kansas.com, "Brownback: State finances solid enough for tax cuts," July 25, 2012
  9. 9.0 9.1 9.2 The Kansas City Star, "Brownback releases a tight Kansas budget proposal," January 12, 2012
  10. Budget Director's Budget Briefing Jan. 13, 2012
  11. Businessweek, "Governors Seeking Jobs Offer Tax Breaks as Budget Woes Ease," January 31, 2012
  12. The Wall Street Journal, "The Heartland Tax Rebellion," February 7, 2012
  13. The Kansas City Star, "Brownback endorses using casino funds for pensions," March 26, 2012
  14. The Salina Journal, "Kan. budget agreement unravels just before vote," March 31, 2012
  15. The Lawrence Journal World, "Legislative budget impasse will cause court closings, furloughs, Chief Justice Nuss says," April 4, 2012
  16. 16.0 16.1 Businessweek, "Kan. Senate approves $14.4B budget plan," May 2, 2012
  17. 17.0 17.1 The Wichita Business Journal, "Kansas House approves $14B budget with $600 million in cuts," March 20, 2012
  18. Kansas Health Institute, "Budget negotiators meet," March 26, 2012
  19. 19.0 19.1 The Topeka Capital-Journal, "Senate advances $14B budget bill," March 2, 2012
  20. The Wichita Eagle, "State senators propose adding rainy-day fund to constitution," January 29, 2012