Governor Laura Kelly believes her budget “…restores fundamental principles of Kansas fiscal responsibility” but the state budget she submitted doesn’t comply with state law, according to former Kansas Speaker of the House Mike O’Neal. The last four administrations have done the same, he says.

According to state statute K.S.A. 75-3721, the Governor’s budget cannot include proposed expenditures that would require additional revenues from new sources of revenue. As O’Neal explains, the proposed budget should spend only existing resources. Kelly’s proposal assumes lawmakers will pass legislation reamortizing the Kansas pension system, or KPERS, and then it spends the money from new revenues.

“The whole intent of the law is to have the Governor submit a balanced budget to the legislature that says, this is what we have available, and with that, this is how I propose to spend it,” O’Neal said. “There’s a good reason to have that law. There’s an even better reason to follow it.”

He says there’s nothing in Kansas law that prevents the Governor from offering a balanced budget using existing resources and on the same day, offering a supplemental budget with new spending and legislative proposals for how to fund it. That’s not what the last four Governors have done, however.

State law also prohibits budgets that include “…any proposed expenditures of moneys in the ending balance in the state general fund required by K.S.A. 75-6702…;” that section of statute requires a minimum ending balance equal to 7.5 percent of expenditures.  Governor Kelly’s budget ignores this legal requirement also, as did the state budget submitted by previous administrations.

O’Neal, a Lawrence Republican who now lobbies, consults and practices law, first learned about the statute during then-Gov. Kathleen Sebelius’ administration. She and former governors Mark Parkinson and Sam Brownback each submitted budgets that used anticipated revenues that would require future legislative approval.

“The reason they don’t want to follow this statute is because the budget would not look pretty,” O’Neal says.  

KPERS reamortization is the linchpin of Kelly’s budget. The plan would push back by 30 years the elimination of the pension system’s unfunded liability. It would allow lawmakers to spend an additional $145 million in the short term, but the plan would cost the state an additional $7.4 billion over the next 30 years. Kelly’s budget also includes highway fund sweeps, deferring a scheduled $115 million KPERS payment, and spends money garnered from federal tax reform, or, the so-called “federal tax windfall.”

Last week, in a lopsided 37-86 vote, the Kansas House spiked Kelly’s proposal to reamortize KPERS. Meanwhile, the Senate unanimously voted to make the $115 million KPERS payment that Kelly’s proposal deferred, setting up the potential for a $1.3 billion tax increase in the next four years to maintain Kelly’s spending proposals.

Kelly’s entire budget proposal is likely dead as a result. O’Neal says that’s the consequence of not proposing a budget that uses only existing revenues.

“As a practical matter, the Governor’s budget is the Governor’s budget,” he said. “The legislature can take it and politely dump it in the trash can if they want. That’s the consequence. They just say they’re not going to pass this budget.”

O’Neal says there’s a reason for the law.

“It makes the Governor do what Kansas families have to do every month, and that’s base their budgets on existing resources. If they want to spend more money, they have to borrow or get a better job,” O’Neal said. “There’s a reason that statute is in place.”

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