Kansas Should Welcome a Return to Federalism

Originally published at Kansas Policy Institute. 

For decades, Washington has made it easier for states to spend money without fully confronting the cost. That era may be coming to an end.

Kansas should see that as an opportunity.

A recent Washington Post editorial documents how dramatically the relationship between Washington and the states has changed. Federal transfers to states reached about $1.2 trillion in 2025, roughly 17 percent of federal spending. Federal money provided about 34 percent of state revenue nationwide in 2024, compared with 22 percent in 1989.

That arrangement allows Washington to collect or borrow money, route it through federal programs, and return it to states with requirements attached.

Kansas is less exposed than most. Federal funds supplied 24.9 percent of Kansas state revenue in fiscal 2024, compared with 34.2 percent nationwide.

But even Kansas has substantial reason to pay attention.

Washington is approaching $40 trillion in gross debt while continuing to run enormous annual deficits. That fiscal path cannot continue indefinitely. Federal aid to states, along with the rest of the federal budget, will face increasing pressure.

The wrong response in Topeka would be to assume that every dollar Washington removes must be replaced with another dollar from Kansas taxpayers.

Instead, ask why the money was being spent.

That is where Kansas has an underused advantage.

Kansas already has performance-based budgeting in state law. Agencies are supposed to provide goals, outcomes, and performance measures that help lawmakers judge whether programs are accomplishing what taxpayers are funding them to do.

Too often, though, those measures do not happen nor drive the budget conversation enough. They should.
Instead of beginning with last year’s appropriation and negotiating how much to add, lawmakers should start with results. What problem is a program solving? What evidence shows that it works? Is there a less expensive approach? Could businesses, nonprofits, families, or local communities handle the responsibility better?

Federal funding reductions would make those questions more important, not less.

Kansas also enters this discussion with spending already elevated. The 2027 Responsible Kansas Budget shows state-funded spending rising from $7.2 billion in fiscal 2005 to $22.3 billion in fiscal 2026. Spending has grown much faster over that period than the benchmark of population growth plus inflation.

So Kansas does not need another source of money to preserve every existing program. It needs better prioritization.

That means pairing serious performance reviews with a firm limit on overall spending growth. A strong Kansas spending limit would force policymakers to make tradeoffs instead of allowing higher revenues to continually ratchet spending upward.

Those savings have another purpose: tax relief.

When government requires fewer resources, Kansans can keep more of what they earn. Permanent reductions in broad-based income-tax rates would improve incentives for entrepreneurship, investment, work, and migration into Kansas. Over time, that can mean a larger private economy rather than a larger government economy.

This is the promise of federalism that gets overlooked.

Fifty states making more of their own decisions create more accountability, experimentation, and competition. Kansans can see more clearly what their government costs and compare its results with Colorado, Missouri, Nebraska, Oklahoma, and beyond.

Washington’s fiscal troubles will create challenges for states. But they could also help reverse decades of centralization.

Kansas should use the opportunity to measure results, eliminate what isn’t working, restrain spending, lower taxes, and return more decisions to the people closest to them.
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That would be a healthier federalism and a stronger Kansas.