14 January 2022 | Tax and budget

At a Glance - Governor’s FY 2023 Budget Proposal

On January 12, 2022, Governor Laura Kelly released her proposed FY 2023 state budget following her State of the State address. Her address highlighted the sensible budget measures during her tenure contributing to a historic revenue surplus and future investment opportunities. The budget proposes total expenditures of $22.6 billion, with $8.9 billion of that from the State General Fund (SGF). 

The proposal will correct longstanding concerns such as:  

  • Adequate funding of the state rainy day fund;  
  • Investment in moderate income housing to improve access to affordable housing and economic development across the state; 
  • Extraordinary transfers from dedicated funds to supplement the SGF; and  
  • Full funding for the State Water Plan Fund and continued full funding for K-12 schools.  

Once again, the governor has proposed expanding KanCare, which will provide health care for an additional 150,000 Kansans while taking advantage of federal incentives to reduce the overall cost to the state. 

Given the revenue surplus and to address the urgent and ongoing basic needs of Kansans, the governor proposed tax changes, including the elimination of the state food sales tax and a one-time direct tax rebate. The proposal also provides funding to make higher education more affordable by freezing tuition for one year.  

While the proposal includes an extension of KanCare coverage for pregnant women to 12 months postpartum, there was, disappointingly, barely a mention of investments to make child care more affordable and accessible in the State of the State address and nothing in the budget presentation. As emphasized by KAC’s Mitch Rucker in a briefing before the House Committee on Children and Seniors on Wednesday, the high cost and low availability of child care has negative impacts on families as well as the Kansas economy. A collaborative solution and large investments by the state as well as businesses are needed to ensure that children are in safe and nurturing environments and providers are adequately compensated.  

Budget Priorities 

The Governor’s priorities for the FY 2023 proposal are to:  

  • Make one-time investments for long-term benefits; 
  • Provide meaningful, sustainable tax changes without jeopardizing future budgets; 
  • Continue to undo budget maneuvers implemented due to previous revenue shortfalls; and 
  • Fund core programs to provide services for those in need and to invest in our future 

These priorities will be achieved through some of the following highlighted investments: 

  • Tax changes to benefit Kansas residents
    • Utilizing some of the $2.9 billion surplus to eliminate the state sales tax, which disproportionately impacts low-income Kansans. This would save a family of four an average of over $500 per year and will cost the state approximately $450 million in FY 2023. 
    • A one-time direct tax rebate of $250 per resident tax filer ($500 for married/filing jointly) at a cost of $460 million to the state.
    • Eliminating the $4 surcharge on vehicle registration renewals. The purpose of the charge was met, and the surplus enables the state to absorb the $12 million dollar cost. 
  • Education 
    • Continuing full funding of K-12 education at the constitutionally required levels and providing additional supports for students and educators, such as $3 million to expand the Mental Health Intervention Team program beyond the pilot phase. 
    • Freezing higher education tuition for FY 2023 and providing $25 million to fund the Kansas Access Partnership Grant, which will make college more accessible for families.  
    • Allocating $15 million of one-time SGF to two-year colleges and technical schools for student recruitment and program development for in-demand career fields. 
  • Economic growth and stability 
    • Allocating $20 million for moderate income housing to address housing shortages and support the growing Kansas workforce and the employers wanting to recruit them. 
  • Health and human services 
    • Extending KanCare coverage for pregnant women to 12 months postpartum. 
    • Allocating an additional $29.3 million to KDADS to increase mental health services across state hospitals and regional partnerships 
  • KanCare expansion 
    • Expanding eligibility for KanCare will allow an additional 150,000 low-income Kansans access to critical health care coverage. This would save the state $68.5 million of SGF in FY 2023  
  • Fiscal responsibility 
    • Depositing $600 million into the state’s rainy day fund, providing Kansas with approximately 25 days’ worth of operating cash in the event of an economic downturn.  
    • Ending extraordinary transfers from the State Highway Fund, Children’s Initiative Fund, and Economic Development Initiatives Fund to the SGF, enabling funds to be fully used for intended programs and services. 
  • Debt management  
    • Paying off several debts early in FY 2023, including KPERS layering payments and the National Bio and Agro-Defense Facility (NBAF) bond. The total debt amount to be paid off in FY 2023 would total almost $600 million. This would release about $71 million in the SGF in FY 2023 that would have otherwise gone to debt service and $252.4 million in SGF over next 16 years. 
    • Cash funding capital projects for state facility upgrades with budget surplus, avoiding $224 million of long-term debt. The Docking building/ KDHE Lab, Hays Armory, and State Defense Building will receive long overdue upgrades to improve their functions.  

Kansas Action for Children advocates for equitable tax and budget policies, which prioritize ensuring opportunity and stability for all Kansas families. We will be releasing a more detailed analysis of the budget in February, examining how the budget addresses the needs of low-income families and improves the health and well-being of children and families, and how the lawmakers can support these efforts. 

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