The state budget
(First of two articles)
Following the money trails of government finance is like trying to track a column of hair lice on a sheep dog.
Nonetheless, a basic understanding of the state budget is on the must list of every legislator, the governor and her staff, and scores of bureaucrats who each year must match the billions of dollars coming into the treasury against a long and complicated list of the billions that go out.
The budget is a plan, an estimate of income against outgo with the idea that in the end, the balance will be in the black. The state constitution says the state cannot spend money it doesn’t have.
Legislators are reviewing Gov. Laura Kelly’s proposed $19.8 billion budget for the 2021 fiscal year that begins in July. This number includes money from all sources – federal receipts, non-federal highway funds, various dedicated taxes and agency funds, and so forth.
It also includes the governor’s proposed $7.8 billion operating fund. This pays the day to day expenses of government and is often called the “general fund” or, simply, “the budget.” Although not the entire budget, it’s the plan that gets nearly all the attention because it is financed chiefly by state income, sales and property taxes.
Kelly’s 2021 budget will stimulate long legislative arguments over how and where to tax and spend. The overall proposal contains nearly $4 billion in federal funds; other revenues come from an array of Kansas assessments, fees and taxes on individuals and corporations. The final spending plan will not be decided by the Legislature until late April or early May.
The state budget affects all of us. Every time a park opens or a siren blows, when the trash is picked up or the roads cleared, when the swimming pool comes to life, or the hike and bike trail beckons, when lights go on at the courthouse or an airport, or bells ring at the school or college enrollment begins, when a street is closed or a bridge rebuilt, when there is help for the poor, when a factory goes up or a farm is refurbished, whenever these and scores of other services touch a community, the state budget is almost always involved.
Kelly’s $19.8 billion overall proposal comes in 893 pages over two volumes. The document represents roughly a five percent, $1 billion increase over actual and estimated spending this year.
But the state’s $7.8 billion operating budget, heat source for spending debates in Topeka, carries a proposed increase of only $17 million, or two-tenths of one percent. This fund also includes an eight percent ending balance of $628 million.
Overall spending can be seen as flowing through five categories:
– The general fund, including capital improvements, proposed at $7.9 billion. This is the state’s day-to-day operating budget. It accounts for about 35 percent of all government spending. This fund derives more than 90 percent of its estimated revenue from state income taxes ($4.58 billion) and sales taxes ($2.9 billion).
– “Other funds,” or what once were called “special revenue” funds, are $9.6 billion, nearly half of planned overall spending. These revenues come from federal receipts and fees assessed by state agencies. Examples are charges for licenses for doctors, barbers, cosmetologists, college fees and tuition, real estate licenses, park fees, hunting and fishing permits and so on. This account also includes property tax revenues captured for the state school finance fund.
– The highway fund, nearly eight percent of total spending, is estimated at $1.57 billion. Most of the money comes from fuel tax receipts, driver license fees, motor vehicle sales taxes, title and registration fees, plus more than $500 million in federal aid.
– Trust and agency funds, at $610 million, include the State Water Plan ($16.3 million), Economic Development Initiatives ($23.8 million), Expanded Lottery Act ($569.5 million) and Children’s Initiatives ($52 million) funds.
– Other assorted funds, at $72.5 million, include the state Institutions, Educational Building, and Correctional Facilities building funds (financed by a limited state property tax.
Sprinkled through all of these funds is money from Washington, estimated at about $3.8 billion, or about 19 percent of the governor’s total spending plan. The federal receipts will go mostly to human services and social welfare, education and the Department of Transportation.
The federal funds include $1.1 billion for education, most of it in $481.5 million for the Department of Education and $621 million to the board of regents and regents institutions; another $448 million is for the Department of Transportation. More than $2 billion is for human services (social welfare), including $485.5 million for Kelly’s new and reorganized Department of Human Services, and $1.5 billion for the Department of Health and Environment.
(Next: the general fund)