The budget submitted to the Kansas Legislature by Gov. Laura Kelly on Thursday would retain more than $680 million in the treasury while investing in her top priorities and begin weaning the government off highway fund raids and an addiction to borrowing.
The Democrat's blueprint presented to the House and Senate budget committees added detail to broad strokes offered by Kelly on Wednesday night in her State of the State speech.
"It’s going to take time for Kansas to heal from the damage inflicted over the last eight years, so we don’t have a moment to lose," Kelly said. "I worked diligently to craft a balanced budget that will usher in a new era of shared prosperity and growth."
The state would have a $900 million balance in the treasury June 30, assuming no adjustments for spending increases or reductions in taxes by the 2019 Legislature. The legislative session's central conflict will be about what to spend or retain of that largess.
Kelly said the budget proposal would achieve "structural balance" and reduce "irresponsible reliance on one-time funds." She said her budget didn't include a tax hike, which was among her campaign pledges.
"Sweeping tax policy changes during a perfect storm of uncertainty is simply not financially prudent," Larry Campbell, the governor's budget director, told legislators in the briefing.
Kelly's proposal would leave $686 million in the state's bank account at the end of the fiscal year, and that 9 percent balance would be the highest in two decades.
"We would all agree we want to be fiscally responsible for the state of Kansas," said Rep. Troy Waymaster, the Bunker Hill Republican who leads the House Appropriations Committee.
Kelly's budget provided $22 million for a 2.5 percent salary increase for state employees, excluding the judicial system and legislative branch. In addition, $3 million was set aside to improve wages of officers in the Kansas Department of Corrections.
Sarah LaFrenz, president of the Kansas Organization of State Employees, said the salary recommendations would "begin to address the rampant understaffing and extremely dangerous working conditions our correctional officers in Kansas face on a daily basis."
The governor's budget earmarked $317 million to immediately repay a loan taken out by the Legislature from an unclaimed state property account. The Legislature had promised to pay it off in five years.
Kelly recommended a $92 million inflation adjustment to state aid for K-12 public schools. The earmark might satisfy the Kansas Supreme Court, which ruled previous school funding unconstitutional. The governor asked the Legislature to adopt this provision before March.
The governor proposed a 14 percent increase in spending on foster care programs. She would, in part, hire 55 social workers to serve vulnerable children.
Kelly sought expansion of eligibility for Medicaid and included $14 million to initiate delivery of health coverage to 150,000 low-income Kansans. She said an expansion plan would be submitted to the Legislature later this month.
The budget was built around reamortizing part of obligations held by the Kansas Public Employees Retirement System. The state budget director said the move would provide $160 million in "short-term savings" but extend the system's debt over many more years.
Senate Majority Leader Jim Denning, R-Overland Park, said Kelly's cost estimate for Medicaid expansion was too low and her plan for KPERS was deeply flawed.
"This whole budget is built on a house of cards," Denning said.
Transfers of Kansas Department of Transportation funding would be reduced by $100 million annually by Kelly. Still, $200 million would continue to be drawn from KDOT to finance basic government.
Kelly's budget would complete restoration of a 4 percent, or $30 million, cut in 2017 from the Kansas Board of Regents. Most of that money was previously restored to universities, but Kelly offered for the final $8.9 million piece to be recovered.
Kelly said the budget wouldn't fix all problems but would fulfill her administration's immediate goals.
"It is a prudent first step that will set the stage for a brighter, more prosperous future — all without a tax increase," Kelly said.