As the 2023 legislative session gets underway, Sentinel’s parent company Kansas Policy Institute is asking state lawmakers to avoid further burdening taxpayers during a time of high inflation by implementing the Responsible Kansas Budget.
For the second year in a row, KPI has proposed its “Responsible Kansas Budget,” a model to achieve a sustainable budget through tax-and-expenditure limits based on transparency and performance-based budgeting, which will rein in government spending to avoid deficits.
“The Responsible Kansas Budget sets the stage for common sense budgeting in Kansas,” Vance Ginn, Ph.D., a senior fellow at KPI and the president of Ginn Economic Consulting, said in a release. “This plan ensures funding for limited government provisions while the vast majority of taxpayer money remains in the productive private sector.”
Last year, Kansas Policy Institute released its first edition of the Responsible Kansas Budget for 2023. The model proposed a limit on All Funds (state funds plus federal funds) appropriations in 2023 at $21.0 billion based on limiting spending increases to the combined rate of population growth and inflation. Instead, the Legislature approved an All Funds budget of $22.9 billion – nearly $2 billion more than the RKB.
Something KPI Policy Analyst Ganon Evans said in the release. was not the appropriate way to set a budget.
“While the RKB is determined by previous years of appropriations, it isn’t a justification for that level of spending,” Evans said. “In fact, there was likely waste or things that could have been approved previously.”
This year’s RKB is using State Funds for a more detailed look at spending in the direct purview of legislators. From 2005 to 2023, state funds appropriations increased by 138.1%, from $7.2 billion to $17.1 billion, for an average annual increase of 5.2%.
Evans pointed out that the appropriations process doesn’t consider efficiency — which leads to more spending than is truly necessary.
“Efficiency is something legislators need to prioritize,” Evans said. “Potential is everywhere in government to reduce costs while still providing the same service. Legislators have the power to control taxing and spending during a time when Kansans are hurting from high inflation.”
The 2024 Responsible Kansas Budget (RKB) sets a maximum threshold on the State Funds budget based on the rate of population growth and inflation during the prior year before a legislative session.
Authored by Evans and Ginn, the report notes that June 2022, the last month of the 2022 fiscal year, marked the 23rd consecutive month that state tax revenue in Kansas exceeded monthly estimates. In 2022, collected tax revenues of $9.5 billion were $438.1 million higher than estimated for the year, and $849.5 million higher than the total collected in 2021 — but just as tax collections increased, so too did spending.
According to the July 2023 Comparison Report, the approved 2022 General Fund budget of $8.51 billion is $1.24 billion or 17.1% more than the actual in 2021.
The RKB uses a simple calculation of finding the growth rate of the state’s resident population and adding it to the growth rate of the state’s Consumer Price Index [a common measure of inflation] to set maximum appropriation limits.
“The RKB is a maximum amount of State Funds appropriations calculated by the change in the prior State Funds budget for the rate of population growth plus inflation in the year directly before a legislative session,” Evans and Ginn wrote. “In the literature around tax-and-expenditure limits (TELs) like the RKB, the rate of population growth plus inflation was found to be less volatile and connected with the average taxpayers’ ability to pay for government spending. The combined rate tends to be a predictable, stable rate of growth highly connected to consumer spending and thus economic activity. The appropriation’s growth over these periods has far outpaced the average annual rate of the state’s population growth plus U.S. chained-consumer price index (CPI) inflation (2.6% from 2005 to 2023, 2.7% from 2005 to 2013, and 2.6% from 2014 to 2023).”
Indeed, from fiscal 2005, through fiscal 2023, state appropriations grew from $7.2 billion to 17.1 billion.
Had the RKB’s appropriation limits been in place, the growth would have been to “only” $11.4 billion, saving Kansas taxpayers roughly $5.7 billion.
“If the state legislature appropriately adheres to this maximum appropriations limit with a focus on appropriating taxpayer money well below this maximum, there will be corrections to past spending excesses and support of ample paths to more economic growth, job creation, and opportunities to let people prosper,” Ginn said.