After attacking Laura Kelly for government spending, Derek Schmidt won't say what he'd cut

As Republican gubernatorial nominee Derek Schmidt decries growth in government spending, he remains mum on what he would cut, if anything, and by how much in the budget.

In television ads, campaign materials, debate comments and stump speeches, Schmidt routinely rails against Democratic Gov. Laura Kelly for "spending more than we can afford."

Schmidt said Wednesday in the second gubernatorial debate that there are "so many Kansas families who are struggling financially today because of Laura Kelly's big spending and Joe Biden's inflation." He said the budget would be his top priority — but did not directly answer the part of the moderator's question asking how he would accomplish his priority.

"I will send to the Legislature a state budget that starts to decelerate the rate of state spending growth that's occurred over these last four years," he said.

He noted that government spending has grown while the population has stagnated and employment is lower than pre-pandemic levels.

"Look, those are not sustainable trends," Schmidt said. "We need a governor who will acknowledge them, and will at least start the conversation with the Legislature about how to deal with them."

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What programs would Derek Schmidt cut?

After a Topeka stump speech that same day where Republicans kicked off a statewide bus tour, Schmidt demurred when asked by a reporter what he would cut.

"I've gotten that question before, and I wouldn't use the word cut," Schmidt said. "That's not where we are. I mean, 35% growth over the last four years in all funds, 25% in SGF. It's a discussion, as I said today at the debate, about trying to slow that rate of growth. And I think that's the key. So it's not a matter of cutting at this point. It's a matter of trying to stop continuing to dig into a hole that's going to be so evident once the federal money is gone."

So is there a certain place in particular that Schmidt wants to see slower spending growth?

"We'll deal with that when we put the budget together," he said. "But I want to be very clear: we will slow that arc of growth, because we have to."

That essentially means voters must wait until after the election to find out how Schmidt would trim spending, as budgeting typically begins in earnest after consensus revenue estimates come out in November.

Mailers from Americans for Prosperity Kansas claim Schmidt will "strategically trim wasteful spending" by bringing the mentality to Topeka that "balancing a budget doesn't mean asking for more funds. It means you stop wasting money." The mailers do not indicate what expenditures he considers wasteful.

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Gov. Laura Kelly claims 'good fiscal management'

Kelly said during the debate that she is proud of her administration's work as stewards of taxpayer money.

"I am very proud of the fact that we have set records all over the place in economic development," Kelly said. "I'm very proud that we have fully funded our schools, that we have closed the 'Bank of KDOT' and there are orange cones all over the entire state. We have really reformed our foster care system so that there are 17% fewer kids in the system and adoptions are up by 35% in the state of Kansas. We're doing good things, we have more good things that we want to get done."

Schmidt said Kelly's claimed successes have come at the expense of more spending.

"At the end of the day, the numbers have to work," Schmidt said. "And the reality is that the way the last four years have unfolded, so much of what the governor talks about is simply accomplished by spending some of the enormous amount of money that the Biden administration and the Congress have printed and shoved through our economy. It's driven up state revenues, as well as direct aid. That won't last forever. We have to get out in front of this curve."

Kelly maintains that her administration has been marked by "really good fiscal management" that has positioned the state for the future with budget surpluses and a robust rainy day fund.

She also argued that more spending was necessary after budget cuts in past years. Former Republican Gov. Sam Brownback gained national notoriety for a tax-cutting experiment that led to lower state revenues and budget cuts.

"Are we spending more now than we were before? Of course we were, but look at the huge budget cuts that we had," Kelly said at the debate. "We had a lot of holes to fill. And then we have had a lot of one-time expenditures that have racked those numbers up and that includes paying down serious debt."

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What does the Kansas state budget show?

Schmidt cited budget numbers in August when he sought to tie Kelly to high inflation, in part by blaming increases in government spending for contributing to inflation.

"Biden's liberal spending in Washington has led to the worst inflation in 40 years, and Kelly has made it worse here in Kansas," his campaign said in announcing a new TV ad. "In her four years in office, Kelly has increased overall annual state spending by $6 billion. On her watch, the state is spending $22.9 billion in fiscal year 2023, a whopping 35.5 percent more than the $16.9 billion in fiscal year 2019."

At 35.5%, government spending has grown faster than inflation, which was about 18% between July 2018 and July 2022.

Data from Kansas Legislative Research Department annual fiscal reports show the state is indeed budgeted to spend $22.9 billion in fiscal year 2023, which started July 2022 and runs through June 2023. Kansas also spent $16.9 billion in FY 2019, which was below the $17 billion originally budgeted for that year.

Of the $6 billion increase in state spending between FY19 and FY23 years, $2.5 billion of it, or 42%, came in Kelly's first full fiscal year.

The all funds budget for FY 2023 is comprised of the following:

• $10 billion on education, a 23% increase from $8.1 billion in FY19.

• $7.6 billion on human services, a 36% increase from $5.6 billion in FY19.

• $2 billion on highways and other transportation, a 82% increase from $1.1 billion in FY19.

• $1.9 billion on general government, a 46% increase from $1.3 billion in FY19.

• $829 million on public safety, a 24% increase from $666 million in FY19.

• $333 million on agriculture and natural resources, a 52% increase from $219 million in FY19.

• $139 million on "other" expenses, which is for state employee pay raises.

The largest percentage increase in government spending comes from transportation — coinciding with the closing of the "Bank of KDOT." The current budget is the first since lawmakers and the governor ended the longstanding practice of sweeping money out of the Kansas Department of Transportation to cover other expenses.

Schmidt has proposed a four-lane highway crossing southern Kansas, which KDOT estimates would cost $2.5-3.3 billion.

The smallest percentage increase was in education funding. Education is the biggest share of the budget, and both Kelly and Schmidt have promised to fully fund schools.

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State General Fund is what lawmakers control

The figures Schmidt's campaign cited were for expenditures from all funds. That includes federal grants and other revenues that are dedicated to specific purposes, meaning legislators and the governor have little control over how they're spent.

What lawmakers and the governor do have far more direct control over is the State General Fund, or SGF.

Despite Schmidt blaming Kelly for increased spending, it was the Republican-controlled Legislature that drafted an SGF budget for FY23 with more spending than what Kelly had proposed.

The SGF budget is $9.2 billion for FY23, above the $8.9 billion originally proposed by Kelly. The budget grew 31% from $7 billion in FY19. That includes the following:

• $5.5 billion for education, up 30% from $4.3 billion in FY19.

• $2.5 billion for human services, up 25% from $2 billion in FY19.

• $551 million for public safety, up 34% from $411 million in FY19.

• $500 million in general government, up 46% from $342 million in FY19.

• $63 million for agriculture and natural resources, up 294% from $16 million in FY19.

• $50 million in "other," which is for state employee raises.

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One-time spending can make increases look bigger

Kansas entered the budgeting cycle with unprecedented surpluses. Policymakers decided to prioritize one-time expenditures so as to avoid making future funding commitments in case tax revenues weaken with a recession. Among the most notable were using federal COVID-19 pandemic aid, paying off debt, funneling money into a rainy day fund and shoring up the Kansas Public Employees Retirement System.

The FY23 general fund budget of $9.2 billion, compared to the $8.5 billion approved for FY22, is a difference of $657 million.

That year-over-year increase is largely accounted for by two significant one-time payments in FY23. Eliminating a delayed school payment cost $200 million, while KPERS got $271 million.

The budget at Schmidt's own office of the attorney general and Kelly's office of the governor show the effects that one-time spending can have when comparing percentage increases.

Schmidt's campaign called a 35.5% increase over four years across the entire budget "whopping." At the AG's office, the all funds budget increased 79% during the same time. At the governor's office, the increase was 1,325%.

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This year's increase at the AG's office is largely due to $34 million in special revenue funds related to opioid litigation. That put the FY23 budget at $61 million, up from $24 million budgeted in FY19.

The $392 million in federal ARPA funds was a significant contributor, among others, to the governor's office seeing a spike in spending this year. Its $456 million FY23 budget was up from $32 million budgeted FY19.

This article originally appeared on Topeka Capital-Journal: Derek Schmidt: Kansas government spends more than taxpayers can afford