The Budget Blog

Governor’s budget resolves imbalance with higher revenue

Kansas faces a challenging budget picture. Projected revenue for fiscal year 2014 is more than $700 million lower than the state’s current level of spending. To balance the State General Fund (SGF), revenue must be raised, expenditures cut or some combination of both. Gov. Sam Brownback proposes to solve the imbalance almost entirely with new revenue.

In his recently released budget, the governor recommends adding $541 million to revenue collections in FY 2014 by making the 6.3 percent sales tax rate permanent ($262 million), eliminating the income tax deduction for mortgage interest ($163 million) and transferring money into the SGF from other funds or stopping transfers out of the SGF ($116 million).

On the spending side of the equation, the governor’s budget decreases FY 2014 expenditures $115 million below the approved budget for FY 2013. However, he accomplishes that by using the highway fund to pay $97 million of public school transportation costs now paid by the SGF and by using gaming funds to pay $38 million of the state’s Kansas Public Employees Retirement System bill, which is also currently paid by the SGF.

Those moves do not cut programs but shift costs to a different funding source. For the most part, the governor’s FY 2014 spending recommendations do not enhance programs, but neither do they make major reductions. Apart from the two big shifts to other funds, all of the other proposed expenditure changes net out to a $20 million increase from FY 2013 spending.

The chart below shows how the governor proposes to change the current SGF outlook for FY 2014. The best explanation of the governor’s proposed revenue increases can be found on pages 31-33 of Volume I of the Governor’s Budget Report. For a summary of the expenditure changes, read pages 37-39.

Kansas State General Fund, FY 2014

—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.