Governor's budget plan spotlights divided Kansas government

TOPEKA, Kan. (AP) — Democratic Gov. Laura Kelly outlined a proposed budget Thursday that commits Kansas to higher spending on public schools and an expanded Medicaid health insurance program while launching a political fight with top Republican lawmakers over their plans for tax relief.

Kelly's release of her proposed $18.4 billion spending blueprint for the budget year beginning in July gave Kansas residents a taste of what a divided state government is likely to look like.

The new governor's budget assumes legislators do not adjust income tax laws this year, even though that's a priority for Republican leaders in the GOP-dominated Legislature. She warned against it in a statement, and her budget director told lawmakers that they should wait up to three years "for the ship to stabilize."

GOP legislators strongly criticized a key part of Kelly's budget, a plan to cut the state's annual payments to pensions for teachers and government workers, a move that allowed her to propose new spending while preserving healthy cash reserves. They also questioned her estimates for the state's costs in expanding Medicaid and were upset that she is breaking with her Republican predecessors' practice of offering two years' worth of annual budgets.

"I feel like I'm driving 70 miles an hour and can see only one car length ahead of me," said Rep. Steven Johnson, an Assaria Republican and one of the GOP moderates whose support is crucial to Kelly's plans.

Kelly promised during her inaugural address and her State of the State speech to work with legislators from both parties and to govern from the political center, even as she offered slashing critiques of state government under former Republican Govs. Sam Brownback and Jeff Colyer.

Brownback successfully pushed GOP legislators in 2012 and 2013 to slash income taxes as an economic stimulus, and persistent budget problems followed. Bipartisan legislative majorities reversed most of those tax cuts in 2017.

"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 in a statement Thursday, arguing that her proposals would "usher in a new era of shared prosperity and growth."

Her proposed budget breaks with her GOP predecessors most notably by including $14 million during the next fiscal year to expand the Medicaid program to cover as many as 150,000 more low-income Kansas residents. Brownback and Colyer opposed an expansion, viewing it as costly to the state, even with the federal government covering most of the expense.

Republican legislators suggested that Kelly's cost estimate is far too optimistic.

"I think you missed it by a decimal," Senate Majority Leader Jim Denning, a conservative Overland Park Republican, told Kelly's budget director during a briefing for the House and Senate budget committees.

Kelly's proposed budget embraces a plan from the State Board of Education to phase in a $364 million increase on public schools over four years. Kelly and other Democrats argue that it will end an education funding lawsuit filed in 2010 by four local school districts.

Legislators boosted funding on schools last year, but the Kansas Supreme Court said it wasn't enough because their law didn't account for years of inflation. The plan is the state school board's best guess on what will satisfy the court, but top Republicans question whether the state can sustain the spending without a tax increase — which Kelly promised to avoid.

Kelly's budget also includes money for the State Department of Children and Families to hire an additional 55 social workers for the child welfare system and to fill vacancies in staff at state prisons. The state still would end June 2020 with $686 million in cash reserves.

Legislators have wrestled with pension costs for decades because of a long-term gap in the funding for benefits. A 2012 law committed the state to more aggressive increases in annual payments to close the gap by 2034, but lawmakers have struggled to keep up with the promises.

Kelly proposes to essentially refinance the remaining $8.9 billion debt over 30 years, closing the gap in 2049. She contends the new payments — $145 million lower for the state in its next budget year — are more sustainable.

Brownback previously floated a similar idea to no avail, and Denning predicted that Kelly's plan will fail as well. He and Johnson argued that the plan will result in larger long-term costs.

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