In State of the State address, Gov. Laura Kelly lays out spending plan, acknowledges COVID surge

Gov. Laura Kelly cautioned lawmakers to use the state's budget surplus prudently in her State of the State address Tuesday, proposing a range of policies she believes will put historically high tax revenues to good use.

The address returned to its traditional spot in the Kansas House chambers after Kelly spoke virtually last year. While some legislators and all invited guests social distanced and wore masks during the evening, many of those in attendance didn't.

Her highest-profile, statewide speech comes 10 months before Kelly is up for re-election, likely in a duel with Republican Attorney General Derek Schmidt.

The speech seemed to acknowledge that political reality, outlining a policy agenda Kelly has been touting for weeks, while also underscoring her bipartisan credentials.

But it also came amid the sharpest increase in COVID-19 cases since the pandemic began, with the surge pushing the state's hospital system to the brink.

More: Kansas hospitalizations could double amid COVID surge. Hospital leaders say help is still needed

Kelly's speech acknowledged that reality, using the speech to encourage residents to get vaccinated against the virus. The line gained widespread applause from Democratic legislators, with Republican lawmakers largely muted, save Rep. John Eplee, R-Atchison, a physician.

"The people of Kansas are getting back on their feet, the state of Kansas is getting back on track," Kelly said in her speech. "However, right now, and likely for the next few months, the threat of COVID-19 remains, particularly for the unvaccinated and the immuno-compromised."

Grocery tax proposal foreshadows coming clash on spending

But the governor also praised the state's "clear-eyed, balanced approach," to fight the virus and preserve the state's economy.

Indeed, Kelly spent much of her time touting the state's strong fiscal position, with the state's economists projecting a roughly $2.9 billion budget surplus for the current fiscal year.

Kelly naturally had ideas on how best to spend the state's windfall.

More: Gov. Laura Kelly, Republicans try to guide policy debate ahead of showdown in Kansas governor's race

She reiterated a call to pass a bill eliminating the state's sales tax on food, a provision expected to cost upward of $400 million per year. Schmidt has also endorsed the proposal, potentially paving the way for action.

Republicans have been quick to point out that Kelly has vetoed past proposals to dump the tax, which were contained in larger tax bills and contained controversial proposals deemed unacceptable to Kelly.

But the governor called on legislators to send her a "clean" food sales tax repeal, with no additional tax provisions, by Kansas Day on Jan. 29.

"The only obstacle that could block this legislation is the same type of toxic political games that have poisoned Washington D.C., where denying a political opponent a win has become more important than getting things done for the people they represent," Kelly said.

Schmidt, who was in attendance in his capacity as attorney general, told reporters after the speech he supported the aim of cutting the food sales tax but was not going to wade into whether other tax items should be mixed in.

"I'm not prepared to start drawing lines in the sand, as she has done," he said. "I'd just like to find a way to get it done."

In his formal response to Kelly's address, House Speaker Ron Ryckman, R-Olathe, laid out a different vision, saying his colleagues would "responsibly rachet down the sales tax, not only on food, but on everything else our families need to buy."

More: With $2.9 billion surplus, how will Kansas lawmakers spend your tax dollars or cut taxes this year?

Republicans are expected to roll out a series of tax proposals this session and areas of interest could include everything from eliminating taxes on retirement accounts to, as Ryckman alluded, an across-the-board decrease to the sales tax.

Meanwhile, many GOP senators, including Senate President Ty Masterson, R-Andover, have expressed interest in a constitutional amendment to limit the state's ability to raise taxes moving forward, though other members — including some Republicans — are unsure of the idea.

Governor to propose higher education, policing investments

Kelly also trumpeted a proposal to freeze college tuition at the state's public universities, a move which she proclaimed to be an investment in the state's next generation.

The Board of Regents signed off on a plan in June that largely flatlined in-state tuition for the current school year, the third year in a row that occurred.

Still, in-state tuition at the University of Kansas, the state's flagship university, has increased 32% in the last decade.

More: Attending a state university? Tuition costs will likely stay flat next school year.

"This virus took something from our students," Kelly said. "And, we are going to give them something back."

Masterson said he was open to the idea but added the state wouldn't be flush with cash forever and needed to use caution.

"When you are awash with stimulus cash, you can do a lot of popular things," he said.

Kelly said her budget also increased investment in the Kansas Highway Patrol and statewide law enforcement, as well as funding for juvenile justice programs.

Ryckman, meanwhile, outlined a range of areas where Republicans believed investment was needed, saying legislators would look to push money into the state's rainy day fund and make investments in the Kansas Public Employees Retirement System.

That is one area where the two parties appear to be in agreement: Kelly proposed socking away $600 million in the state's rainy day fund during her speech.

‘Let us all hold hands these next few months’

Kelly's speech included a number of staples from past addresses, including an emphasis on her work to push lawmakers to abide by court-mandated funding increases for K-12 education and calls to expand Medicaid, something Republicans maintain no interest in doing.

But the speech also was clearly of the current moment.

Kelly referenced the deaths of Kansas political icon, former U.S. Sen. Bob Dole, referencing a quote from Dole where he proclaimed "honorable compromise is no sin," to applaud bipartisan work within the legislature.

Indeed, Kelly used the speech to tout her bipartisan, moderate bona fides — seemingly with an eye towards the 2022 election. That included references to work with President Donald Trump on protecting meatpacking plants during COVID-19 and support for law enforcement officers statewide.

House Majority Leader Dan Hawkins, R-Wichita, told reporters "this was a re-election speech, most definitely, not a policy speech."

"This is 'Let's throw out all the red meat we can and hopefully it will stick out there and people will love me and re-elect me,'" he said. "That's what this was."

More: Kansas coroner rules homicide in death of Black teen who was restrained face-down on jail floor

And Schmidt said there were a range of issues he would have liked to see the governor address, including organizational struggles at the Kansas Department of Labor and staffing shortages at the state's prisons.

"It was sort of a speech that focused on the long-hanging fruit and I suppose that is to be expected in a re-election year," he said. "But it doesn't make the difficult issues any easier."

Still the governor decried an increasingly heated political climate in Kansas and across the country, one she said had grown "toxic."

Though Kelly said the elected officials present in the Kansas House chamber were not at fault they could do their part to cool tensions.

"So, let us all hold hands these next few months," Kelly said. "And not let go until we finally get things done."

Andrew Bahl is a senior statehouse reporter for the Topeka Capital-Journal. He can be reached at abahl@gannett.com or by phone at 443-979-6100.

This article originally appeared on Topeka Capital-Journal: In Kansas State of the State address, Gov. Kelly talks spending plan