Governor’s FY 2025 Budget Proposal

Alice Fitzgerald | February 22, 2024

In early January, Governor Kelly released her proposed FY 2025 state budget. In her State of the State address, she highlighted economic growth, tax cuts, and the historic investments in child care and rural infrastructure. The budget proposes total expenditures of $26.5 billion, with $11.2 billion of that from the State General Fund (SGF). 

If the Legislature agrees with the proposal, several long-standing concerns will be corrected, including:  

• Investment in child care;  
• Investment in moderate-income housing to improve access to affordable housing and economic development across the state; 
• Full funding for the State Water Plan Fund;  
• Medicaid expansion – at no cost to the state;  
• One-time expenditures for early debt repayment, capital improvement projects, and community investment; 
• Continued investment in post-secondary education; and  
• Full funding for special education 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 SGF to $0 for 15 years. 

Given the revenue surplus and to address the urgent and ongoing basic needs of Kansans, the Governor proposed moving the elimination of the state food sales tax to April 1, 2024, and creating a back-to-school tax holiday. The proposal also provides funding to make higher education more affordable by increasing need-based funding to bring Kansas to the regional median.   

Budget Priorities 

The Governor’s priorities for the FY 2025 proposal are to:  

• Make one-time investments for long-term savings; 
• Provide meaningful, sustainable, bipartisan tax changes without jeopardizing future budgets; 
• Continue to accelerate payments of state debt; and 
• Fund core programs to provide services for those in need and invest in the state’s future. 

These priorities can be achieved through some of the following investments. 

Tax Changes to Benefit Kansas Residents 

• Speeding up the elimination of state sales tax on groceries, which disproportionately impacts low- and middle-income Kansans. 
• Doubling the Child and Dependent Care Tax Credit, which would save Kansans $6.0 million per year. 
• Increasing the residential property tax exemption to the first $100,000 of appraised value for residential homeowners on the 20 mill state property tax, which is estimated to produce taxpayer savings of $93.4 million in FY 2025. This is an increase from the current first $42,049 of appraised value exempted. 
• Raising the standard deduction, overwhelmingly benefiting low- and middle-income households. 

Child Care and Education 

• Continuing to fully fund K-12 education at the constitutionally required levels and provide additional support for students and educators. 
• Fully funding special education at the level required by law through an incremental addition of $74.9 million for each of the next five years. 
• Allocating $30.0 million for child care capacity accelerator grants and $15.0 million for sustainability grants to be administered by the Department for Children and Families.  
• Providing $3.0 million in incremental funding to expand the Mental Health Intervention Team Pilot Program. 
• Increasing post-secondary need-based aid funding by $14.1 million, which would bring Kansas up to the regional median.  
• Allocating $25.4 million of one-time SGF money to colleges and community apprenticeship programs for workforce development.  

Economic Growth and Stability 

• Allocating $10 million for moderate-income housing to address housing shortages and support the growing Kansas workforce and employers wanting to recruit them. 

Health and Human Services 

• Providing $40 million for emergency housing matching dollars.  
• Allocating $10 million for the Kansas Department of Health and Environment small town water infrastructure grants. 

KanCare Expansion 

• Expanding eligibility for KanCare to provide an additional 150,000 low-income Kansans access to critical health care coverage, with a net-zero SGF impact for 15 years. 

Debt Management

• Paying off several debts early in FY 2025, including bond tender or defeasance for pension obligation bonds and capital lease prepayment. The total debt amount to be paid off in FY 2025 would total $521.3 million.
• Supporting capital improvement projects for state facility upgrades with budget surplus funds. The Hutchinson Correctional Facility and Topeka Correctional Facility’s medical/behavioral support building would receive long overdue upgrades to improve their facilities.  

What's Next

Investing in child care, expanding KanCare, and improving our state’s infrastructure are commonsense solutions that will have long-lasting impacts on low- and middle-income families. Now, the decisions are up to the Legislature. As committees meet to hear agency budget requests and the Governor’s corresponding recommendations, lawmakers will either accept or reject the proposals.  

We’ll keep an eye on what’s included — and what’s not. We urge the Legislature to carefully and purposefully craft an equitable budget that works for everyone, regardless of race, family income, zip code, identity, or ability.  

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