The Budget Blog

A two-year state budget?

Gov. Sam Brownback has indicated he will deliver a two-year budget plan to the Legislature next week. It’s likely that means two one-year budget plans: one for fiscal year 2014 and another for fiscal year 2015.

A biennial budget has the potential advantage of allowing a deeper look into the future and, as a result, better long-term planning. For example, if school districts or state agencies know their approved budget two years in advance, they can make necessary adjustments to their programs earlier. However, that advantage diminishes considerably if the second year of the budget plan is based on an unrealistic or inaccurate revenue forecast that eventually requires the FY 2015 budget to be extensively redone.

In Kansas, consensus revenue estimators have produced an official revenue forecast for FY 2014, but not for FY 2015. So the revenue forecast in the second year of the governor’s two-year plan will be a key thing to watch. How much revenue growth will the governor project for FY 2015? Does that FY 2015 estimate seem realistic?

The majority of states, including Kansas, currently produce annual budgets. Nineteen states budget on a “biennial” basis, but of those, only two — North Dakota and Wyoming — have a true two-year consolidated budget. All of the other biennial states enact two annual budgets at one time. Kansas has always been considered an annual budget state, although for many years the state has done biennial budgets for the 20 smallest state agencies.

For an excellent discussion of annual versus biennial budgeting, read the National Conference of State Legislatures report, State Experiences with Annual and Biennial Budgeting. A table from that report showing the budget status of each state is shown below.

Annual and Biennial Budgeting States

—Duane Goossen, KHI's Vice President for Fiscal and Health Policy, served as state budget director for 12 years in the administrations of three governors — Republican Bill Graves and Democrats Kathleen Sebelius and Mark Parkinson. He also served in the Kansas House of Representatives from 1983 to 1997.