Enhancing Kansas’ Budget Process for Fiscal Responsibility

Originally published at Kansas Policy Institute.

​The Kansas Legislature will consider transformative changes to the long-standing challenges in the state’s budgeting process this fall. State law mandates that the governor provide a budget report to the Legislature. However, this practice has evolved into the governor proposing an entire budget, with the Legislature making adjustments. The Legislature should instead have a more active role in proposing the budget, working with the governor to improve it, and giving the governor ways to adjust it with line-item vetoes afterward to help provide effective fiscal management.

Opportunities Moving Forward
Regardless of who proposes the budget, the state should consider a year-round approach to spending and budget review. The budget committees should meet periodically after a regular session annually to conduct performance-based analyses. State law requires performance-based budgeting, but it has yet to be faithfully implemented, and time limits during the legislative session make it difficult to police. As part of a year-round budget process, the Legislature should notify agencies that no spending increases will be approved for agencies that fall short of performance-based budgeting expectations. This proactive approach would replace the current practice where budget committees listen to agency proposals without adequate analysis. 

Another effective method for evaluating whether programs are delivering their intended goals is through independent, external efficiency audits. Unlike internal reviews, these audits objectively assess government programs’ effectiveness, which can suffer from the “fox guarding the henhouse” syndrome. While not perfect, efficiency audits can mobilize public interest from taxpayers and watchdogs to advocate for reforms or eliminate inefficient programs, thereby reducing unnecessary taxpayer expenditures.

Other ideas include improving the sunset review process and requiring the sundown of programs and agencies to enhance Kansas’ budget effectiveness. This process can help with priority-based budgeting, which combines performance-based and zero-based budgeting. Combining better review processes during the year, sunset meetings, and program sundown at fixed intervals would improve the budget process.

Add a broad spending limit with a strong, preferably constitutional, constraint. This would compel legislators to identify inefficiencies and phase out failing programs. A fiscal rule such as the Responsible Kansas Budget could serve this purpose effectively, ensuring that spending grows sustainably, aligned with population growth and inflation.

Learning from Other States
Many states have adopted best practices to improve their budget processes, drawing from performance-based budgeting, zero-based budgeting, efficiency audits, and spending limits. Here’s an overview of what other states are doing.

Colorado

• Taxpayer’s Bill of Rights (TABOR): Colorado has a constitutional spending limit known as TABOR, which restricts the revenue the state and local governments can retain and spend. Excess revenues are refunded to taxpayers, helping enforce fiscal discipline.

Florida

• Long-Term Financial Planning: Florida emphasizes long-term financial planning, requiring a three-year outlook on budgetary impacts for proposed expenditures and revenue changes. 

Louisiana

• Top-Down Budgeting: Louisiana has a top-down approach where the governor’s proposed budget is the starting point for the Legislature to tweak.
• Efficiency Audits: Louisiana conducts efficiency audits of some programs through the state auditor’s office to assess whether state programs meet their intended goals.

Texas

• Bottom-Up, Performance-Based Budgeting: Texas’ budget starts with a ceremonial budget from the governor, like the one from the president at the federal level, then is crafted by the Legislature. The governor has a line-item veto of strategies after passage. Texas periodically conducts a performance-based budgeting system. 
• Efficiency Audits: Texas conducts independent efficiency audits of some programs whereby the state auditor contracts with a private entity for more objectivity within existing funding to evaluate whether program outcomes match the program vision.
• Spending Limit: Texas has a relatively strong spending limit that was updated in 2021 to cover about half of the total budget based on the rate of population growth and inflation.

Utah

• One-Door Policy: The Utah Model includes streamlining operations and improving service delivery through efficiency audits and performance-based budgeting. It also involves putting the workforce and safety net together under one agency, which could be part of Congress extending the Workforce Innovation and Opportunity Act (WIOA) this year.
• Constitutional Spending Limit: Utah has a constitutional spending limit that ties budget growth to a formula based on population growth and inflation.

Recommendations for Kansas
Kansas can draw inspiration from these states and ALEC’s budget reform toolkit:

• Providing Annual Budget Analysis: Evaluating the budget and specific programs through the budget committees after regular sessions annually.
• Adopting Priority-Based Budgeting: Implementing a combination of performance-based and zero-based budgeting with priority-based budgeting for thorough evaluation and justification of all expenditures of taxpayer money.
• Conducting Independent Efficiency Audits: Regular, external efficiency audits can bring transparency and accountability to government programs and savings to taxpayers.
• Strengthening Spending Limit: Imposing strong constitutional or statutory spending limits, like KPI’s Responsible Kansas Budget that is similar to Texas’ limit or Colorado’s TABOR, helps enforce fiscal discipline for state and local spending with surpluses used to lower tax rates.
• Engaging in Long-Term Financial Planning: Incorporating long-term financial planning, as practiced in Florida, can ensure sustainability and preparedness for economic fluctuations.
• Reduce Dependency on Federal Funds: The federal government is running massive deficits and will need to make major budgetary changes which could influence the federal funds sent to states so states should prepare now with transparency and reduction in federal funds received.

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By adopting these best practices, Kansas can move towards a more efficient, accountable, and fiscally responsible budget process. Incorporating these reforms will help Kansas enhance its budget process, ensuring more effective and efficient use of taxpayer dollars. The upcoming informational hearings provide an excellent opportunity to advocate for these changes and set Kansas on a path to long-term fiscal health.