Gov. Laura Kelly on Thursday introduced a new budget that makes a historic investment in child care, restores state revenues for local government, raises state employee pay, funds special education for schools, cuts taxes and expands Medicaid.
Budget Director Adam Proffitt laid out a $25.2 billion budget for fiscal year 2025 that also puts more than $700 million into capital projects for corrections, higher education and law enforcement and another $80 million into community projects such as the World Cup.
The governor’s budget comes at a time when the state is projected to have a $2.8 billion budget surplus at the end of the current fiscal year in June, although about $1 billion of that money is extra Medicaid funds the state received during the pandemic.
The governor’s budget, which emphasizes using one-time revenues for one-time expenses, would leave the state with an ending balance of about $1.4 billion in fiscal 2025.
The budget includes controversial proposals such as expanding Medicaid and adding money back into a special fund that’s intended to help local governments cut property taxes, although Republican critics say the money went to fund other local spending.
Republican leadership has opposed expanding Medicaid and has objected to putting money back into the local ad valorem tax reduction fund, which the state hasn’t bankrolled in about 20 years over the objections of local governments.
The budget also includes the governor’s latest tax plan, which exempts Social Security income from taxes, creates a back-to-school sales tax holiday and cuts property taxes by increasing the exemption for the state’s 20-mill tax levy for schools.
The governor offered up the tax plan as an alternative to the single-rate structure backed by Republican leadership in the Legislature. The governor’s tax plan would cost about $1 billion from fiscal year 2025 to 2027.
“We’ll be taking a closer look in the upcoming days,” House Speaker Dan Hawkins said.
“But at first glance my response from last night’s address rings true for her budget today – the governor is certainly embracing spending tax dollars to unnecessarily grow government when Kansans would rather government to do fewer things, but do those things better.
“Republicans will be focused on the latter.”
The governor said the budget makes the largest single-year investment in early childhood care and education with $56.4 million allocated for expanding child care slots and supporting the child care workforce.
The state needs about 85,000 child care slots to meet demand, which is a hindrance for employers trying to hire in a tight labor market.
Two-thirds of Kansas children under the age of 6 require some form of child care because their parents have to work outside the home, state officials have said.
“There is a capacity shortfall in Kansas and we all know child care issues are workforce issues in Kansas,” Proffitt said.
“If parents can’t find child care for their kids, it’s going to be difficult to go to work.”
Last year, the Kansas Children’s Cabinet dealt out about $65 million — mostly in federal funds — for creating nearly 6,000 day care slots in the state.
The governor’s budget would put $30 million into grants that would be used to construct new child care facilities and $15 million that would go to child care providers, especially those based in the home, to help offset expenses.
The $15 million would be administered by the Department for Children and Families and go to about 3,500 child care providers who could get $4,000 grants for expenses.
During the pandemic, more than $283 million in federal funding was provided to child care providers to offset the operational costs of providing care.
The federal funding was intended to provide a financial lifeline to many providers that were teetering on the brink of closing during the pandemic.
“The ending of this funding could increase costs for families and eliminate wage supports provided to the workforce,” the governor’s budget said.
“A round of state-level funding to support the operation and wages of these workers could help keep facilities open, increase wages for workers, and ensure slots exists for working families,” the budget said.
The budget also would put $5 million into a pilot program in Northwest Kansas that will provide a model for how public-private partnerships can improve child care in rural Kansas.
Last year, a leading child advocacy group – Kansas Action for Children – urged lawmakers to put $300 million into funding child care in Kansas, saying it should be treated the same way the Legislature allocates money for highways, high-speed internet and schools.
Among other things, the group recommended funding grant programs to provide bonus payments to child care workers for longevity and degree completion and to help child care workers obtain health insurance.
“This is a huge step forward in building the child care system that Kansas kids and families deserve,” said John Wilson, president and CEO of Kansas Action for Children.
“Adding more than $50 million will give families more child care and early learning options so their kids can be in high-quality learning environments,” he said in a statement.
“And not only will it help Kansas increase the quality and availability of care, but it is also an investment in the early education professionals who play a vital role in children’s development,” he said.
Republican state Rep. Troy Waymaster, chair of the House Appropriations, said the child care issue needed to be addressed.
“All of our communities across the state of Kansas are in dire need of more child care services,” Waymaster told reporters.
“That’s economic development,” he said. “If you’re able to find a child care provider, then you’re able to go to work.”
The budget also puts money into a number of other projects, such as reconstructing the Hutchinson Correctional Facility, where the buildings were constructed on 239 acres between 1898 and 2008.
A recent Corrections Department study showed that the Hutchinson prison needed about $29 million in repairs immediately and another $45 million in the next two to 10 years.
The study recommended that the Hutchinson prison be replaced. The building employs about 500 people who face safety concerns because of the facility’s condition.
It needs about $8.4 million in work on its heating and air conditioning system and about $8.1 million for interior renovations.
The facility also does not meet current standards established by the Americans with Disabilities Act and the American Correctional Association.
It also has numerous fire code violations, the study said.
The consultant’s report also showed that about $4 million needed to be spent on fire protection and another $3.3 million needed to be spent on plumbing.
The budget also would allocate $75 million for the University of Kansas Medical Center to consolidate its cancer research at one facility in Kansas.
Currently, the university carries out its cancer research in 15 buildings at three different campus sites in the Kansas City area.
The project would allow the university to increase available lab space and increase the number of researchers at the center.
It would create an environment in which researchers and clinicians can work together more effectively, accelerating the growth of clinical trials and reducing the time to get treatments from bench to bedside, a school spokesperson said.
In her budget, Kelly proposed for the state to set a minimum wage of $15 an hour for its employees. The governor’s request only applies to state employees, not the private sector.
Budget Director Proffitt told lawmakers that there are 969 state employees who make less than $15 an hour at an average $13.17 an hour.
He said the governor is proposing to raise wages for those employees to $15 an hour and then apply a 5% across-the-board pay raise she’s proposing for all employees.
Bringing those employees up to $15 an hour would cost about $3 million. The 5% across-the-board increase would cost about $169 million.
The governor also is asking for $74.9 million for each year through fiscal year 2029 to fully fund the excess costs of special education.
State law requires that funding for special education be equal to 92% of excess costs over regular education.
State aid is projected to only cover 66.4 percent of excess costs, or a shortfall of $206.8
million, meaning that local school districts have to make up for the expense.
The state hasn’t met its statutory obligation since fiscal year 2011, and public school advocates have been calling on the Legislature to fund special education.
