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April 8, 2010
AFP Presentation: The Kansas State Budget and How We Got There - Derrick Sontag, Kansas State Director
Presentation to the Sunflower Republican Club – April 8, 2010
AFP: Americans for Prosperity
Who We Are
GOAL: Support policies that promote freedom of the individual and freedom of the marketplace
Who We Are
¢ A national grassroots organization with a network of more than 1 million citizen leaders
l Nearly 40,000 in Kansas
¢ Educational Foundation 501c(3)
¢ Lobbying/Issue Advocacy 501c(4)
When you can’t make them see the light, make them feel the heat.
-Ronald Reagan
State of the State
Kansas Jobs Picture: 1999-2009
Source: Kansas Policy Institute
Private v. Public Sector Jobs
December 1999 – December 2009
¢ Private Sector
l Lost 30,000 jobs
l 2.7% decline
l Avg. hourly compensation of $25.35
¢ Public Sector
l Added 20,300 jobs
l 8.4% increase
l Avg. hourly compensation of $32
Kansas Population Growth
2000-2009
¢ 86 of the 105 counties lost population
¢ 34th in population growth, averaging .46% annual growth
Meanwhile, things have been out of control in Topeka
¢ Excessive and inefficient spending
¢ Staggering amount of debt
¢ High tax burden
Kansas Government Spends Your Money on Five Major Functions
K-12 Education 52.3% of SGF expenditures
Human Services 23.6% (Medicaid is 16%)
Higher Education 12.6%
Public Safety 6.5%
General Government 4.2%
FY 2010 (July – February numbers)
¢ Individual Income Tax 49.1% of SGF
l FY 2010 receipts down 9.5% from FY 2009
¢ Retail Sales Tax 32.4% of SGF
l FY 2010 receipts down 3.4% from FY 2009
State Spending Facts
¢ SGF spending increased 40% from FY 2004 to FY 2009. 250% from ’93 – ‘09
¢ Thirty-three months ago, at the end of FY 2007, Kansas had a $934 million surplus
¢ When the legislature left town in May they passed a budget with a projected ending balance of $17,000
¢ The estimated budget shortfall for the FY 2011 budget is now more than $400 million
K-12 Education Spending:
Are we at pre-Montoy levels?
A Look at Total Funding For Schools (federal, state, local)
¢ All funds expenditures for the 2009 – 2010 school year is $5,553,397,352 (estimated)
¢ That compares to $5,446,364,682 just two years ago
¢ Funding per pupil is at $12,225 for 09-10. That represents a 26% increase from five years ago.
¢ $1.4 billion is residing in unencumbered funds. Including $699 million in local and state operating funds.
Education Funding Perceptions
State wide poll of 600 adults (25+) not employed by schools or related organizations. March 8 to 27. Margin of error of 4.1%. Poll conducted by Kansas Policy Institute.
How Much Is Enough To Run State Government?
¢ Business tax receipts increased 83% from 2001 to 2008.
l Franchise tax +178%
l Corporate income +104%
l Insurance Premiums +74%
l Oil & Gas Severance +46%
And for Individuals?
¢ Individual tax receipts increased 47% from 2001 to 2008.
l Cigarette tax +131%
l Individual income +46%
l Alcoholic Beverages +34%
Tax Breaks for the “Wealthy”
Top Tax Relief Items from 1995 – 2009
¢ 35 to 20 mills reduction $4.4 billion
¢ Car Tax $1.4 billion
¢ Reduce single income rate $616 million
¢ Increase earned income credit $446 million
¢ Increase personal exemption $368 million
¢ Increase food sales tax rebate $356 million
¢ Increase standard deduction $174 million
Most measures enacted during the 1990’s when revenues increased by 75% from 1990 – 1998.
Tobacco Tax Proposal
¢ After a 55¢ tax hike, the Kansas tax would be $1.34/pack -- about 8 times greater than the 17¢ tax in Missouri. Kansas consumers could save $11.70 per carton in Missouri.
¢ 33 percent of Kansas’ population lives along the Missouri border.
¢ A 55-cent cigarette tax increase in 2010, combined with the federal tax increase of 2009, would cause an additional projected 25 percent drop in sales for Kansas retailers.
¢ Gross profits lost to Kansas retailers and wholesalers would exceed $20 million.
Kansas’ Tax Burden
State & Local Debt Per Capita (2007)
¢ Kansas - $7,124
¢ Missouri - $6,595
¢ Oklahoma - $4,610
¢ Colorado - $9,627
¢ Nebraska - $6,524
The Good News is… We Can Change it!
What Would Have Happened With Spending Constraints In Place?
¢ Kansas would have experienced a surplus of $554 million in state coffers for FY2010. With just six years of spending controls the cumulative amount of funds that could have been returned to taxpayers would have been in excess of $3.7 billion. This infusion of cash into the economy would have generated additional tax revenues for the state coffers while strengthening Kansas’ private sector economy to weather the recession.
Commonsense Budget Proposal