Earlier this year, Gov. Sam Brownback and Republicans in the state legislature passed an overhaul of the Kansas tax code, which significantly reduced income taxes—particularly on those in the top income bracket and on small businesses.
The result of the tax cuts is an estimated $327 million budget shortfall between spending commitments and state revenue. Conservatives insist the tax cuts will stimulate long-term economic growth and bring in more future revenues, but critics aren’t so sure.
Brownback’s budget director Steve Anderson told state agencies to prepare for a potential 10 percent cut in their budgets. The tight budgets would potentially lead to significant cuts in services and government functions.
The 2014 budget, which will likely be passed this spring by the legislature, will have to address the budget shortfall. There are a number of ways for the governor and Republican dominated legislature to make up the shortfall, including spending cuts and tax increases. Here’s where revenue comes from now and what the state could do to make up for the budget shortfall.
EDUCATION
Education is the largest item in the Kansas budget, making cuts to education a serious possibility. About 43 cents of every dollar from all state funds is currently directed toward education. However, education makes up about 62 percent of the state’s general fund. Brownback has said he would “protect” education, but he hasn’t provided specifics about what protecting education actually means.
A 10 percent cut to the entire education budget would save more than $600 million. But put another way, a 10 percent cut to base aid per pupil means spending about $380 less per student. However, total spending per pupil would vary depending on the school because funding comes from local, state and federal sources. Any education cuts would likely result in layoffs.
For higher education, Brownback previously told the Kansas Board of Regents not to expect any funding increases. Monday, his budget office recommended a funding a cut of about 8 percent. It would save the state about $60.8 million from the general fund.
HUMAN SERVICES
Human Services is the next largest budget item behind education. Human services comprises about 33 percent of the total budget and nearly 25 percent of the state’s general fund. Human services include functions that provide food for the poor, support for the unemployed, elderly and disabled, as well as a number of other programs including the Department for Children and Families, Department of Health and Environment and the Department of Labor.
If education is protected, human services would likely be next in line to receive significant cuts. A 10 percent cut to total human services spending would save about $478 million. Cuts could result in staff layoffs, fewer services or poorer quality of services.
INFRASTRUCTURE
The state could cut infrastructure spending. Much of the revenue for the Kansas Department of Transportation (KDOT) comes from the federal government. State expenditures for transportation account for just 0.3 percent of the state’s general fund and 9.7 percent of all funds.
A 10 percent reduction in funding from the State General Fund would save about $1.6 million. Earlier this year 40 KDOT employees in Topeka were laid off to save money for transportation projects. The governor said he wants to protect transportation projects from cuts, which could mean more layoffs in the department should it receive any cuts.
SALES TAXES
The state sales tax — currently at 6.3 percent — is scheduled to go down to 5.7 percent in July, but Budget Director Steve Anderson said the administration would propose to keep it at its current level to bring in more revenue. Many are opposed to that move, however, because higher sales taxes would disproportionately affect low-income Kansans, as they spend a significantly higher percentage of their incomes on purchasing everyday items.
The retail sales tax brought in more than $2.1 billion to state coffers in 2012. Additional excise taxes on cigarettes, liquor, gas and other items brought in an additional $635 million. If the increased sales tax rate of 6.3 percent is maintained, it could bring in an additional $260 million.
Sources: FY2013 Budget Report, Kansas Legislative Research Department
In the wake of sweeping tax cuts implemented by Kansas Gov. Sam Brownback, state agencies are preparing for a substantial decline in state funding. Legislative researchers are predicting a $295 million gap between existing spending commitments and projected revenue. To cope, Budget Director Steve Anderson has told state agencies to prepare for a possible 10 percent cut in their budgets. Here’s a look at some of the state-funded agencies, functions and services based on reports from the state’s budget office, beginning with the groups that receive the most state aid.
1. ELEMENTARY AND SECONDARY EDUCATION
Distributing funds to school districts is the key function of the Kansas Department of Education. The state gives more than $2 billion to schools, and the governor has said he would “protect” education in the next budget. However, some still fear cuts to school programs. But even if education doesn’t get any cuts, it’s unlikely that it would receive any increased funding either.
This will be the most politically sensitive item on the budget, as well as the most expensive. If education funding is reduced it could mean fewer teachers, administrators, resources available to students or increases in local taxes to make up the difference.
2. POSTSECONDARY EDUCATION
The governor’s office recently recommended an eight percent funding cut to higher education, though he had earlier said there could be funds targeted for specific projects. This reflects a national problem: State governments used to be the primary source of funding for public colleges and universities, but as states face their own budget problems, they are no longer funding higher education to the same degree as before. More students than ever are attending higher education institutions, and state funding hasn’t kept up. Should higher education funds stagnate or decrease, we could expect the financial burden to shift even more heavily to students’ tuition and fees.
3. DEPARTMENT ON AGING AND DISABILITY SERVICES (KDADS)
This department includes Medicaid programs for the elderly, mental and other public health initiatives. The recently created department actually receives more total funding than its predecessor did a few years ago, because it took over some programs provided by the Kansas Department of Social and Rehabilitation Services (SRS) and other agencies. A report from the state’s budget office indicated that many KDADS programs have seen growth in their caseload—for individuals and costs—which comes as more baby boomers retire. Federal officials recently granted Brownback’s request to turn Medicaid over to private companies next year, which the governor said is because the program is unsustainable and would eventually crowd out funding for other government programs.
4. CORRECTIONS
Kansas’ prison system is currently operating over capacity and a 10 percent cut, according to Kansas Secretary of Corrections Ray Roberts, would have “real serious impacts on public safety.” With an over capacity prison system, cuts to facilities and staff would be quite difficult, so the first round of cuts would target parole and community corrections programs. Funds for community based services, sanctions and supervision of offenders would be cut, Roberts said. In recent years, the state has adopted new DUI laws that place a greater burden on these programs—creating problems as laws get stricter and budgets get tighter.
5. JUDICIAL AGENCIES
In April, Kansas state courts and the 1,500 employees of the judicial branch were sent home for a day without pay due to a budget shortfall. In response to this furlough the legislature increased funds for the courts. The legal status of the judiciary means it hasn’t had to plan for a reduced budget. However, should a 10 percent cut befall the state’s judicial funding, it may be possible another budget shortfall would again shut down the judiciary and leave state employees without pay.
6. DEPARTMENT FOR CHILDREN & FAMILIES
This department has already experienced cuts over the past couple years. For example, Temporary Assistance to Families—one of the programs run by the department—saw about 43 percent of its funding cut between fiscal year 2011 and fiscal year 2013.
7. JUVENILE JUSTICE AUTHORITY (JJA)
The Juvenile Justice Authority currently operates on a budget of more than $90 million. This agency is responsible for an array of prevention and intervention programs, juvenile correctional facilities and community sanctions. Earlier this week, Brownback announced he wants to merge the JJA with adult corrections.
8. TRANSPORTATION
The primary function of the department is maintaining the state’s 10,000 miles of highway. In August, the governor authorized the layoff of 40 KDOT employees, which was about five percent of staff at KDOT headquarters. Brownback has said he would try to protect transportation projects from further cuts.
9. KANSAS COMMISSION ON VETERAN’S AFFAIRS (KCVA)
This agency helps veterans get medical care, receive benefits and further their educations. Veteran Service Representatives provide these services to the state’s veterans for free. In the last budget the agency got about $20.5 million, about $7.5 million of which is from the state.
10. KANSAS WATER OFFICE
The Kansas Water Office (KWO), which is responsible for planning water use and conservation, received about $7.2 million from the legislature in the last budget. The KWO is also responsible for responding to droughts, like the one the state experienced this past summer.
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