(CN) - After a decade of turbulent financial troubles, Kansas Democratic Governor Laura Kelly urged lawmakers in Topeka to continue the state's economic upturn in her State of the State Address Wednesday evening.
Amid increased tax revenues, balancing the state budget and an end to a decades-long court battle over inadequate public school funding, Kelly said she applauded the Republican-majority Legislature for working with her.
"Last year I stood here and asked you to put aside partisanship and work with me to finally provide schools with the resources they need to be successful. You did it, and I applaud you," she said.
She also cautioned lawmakers that she would veto any bills from this year's legislative session that would underfund schools again or send the state into a "fiscal crisis."
“To protect our recovery, and to ensure Kansas does not repeat the mistakes of the last decade, I will veto any tax bill that comes to my desk that throws our state back into fiscal crisis, or debt, or sends us back to court for underfunding our schools," Kelly said. "I hope you won’t stand for it either.”
Kelly also praised Republican lawmakers for working with her on a plan to expand Medicaid. Last week, Kelly and Senate Majority Leader Jim Denning announced a compromise on expansion that could add an additional 150,000 people to the rolls.
“When we add this to our list of bipartisan accomplishments, we will not only save lives, it will close the book on a long, senseless, expensive political fight — making room to improve access to health care and grow the Kansas economy,” Kelly said Wednesday.
As Kelly addressed lawmakers, she mentioned that for the first time in history, all three branches of state government were helmed by women. In addition to Kelly, Senate President Susan Wagle and Supreme Court Chief Justice Marla Luckert head up the state's legislative and judicial branches, respectively.
She referred to the "failed tax experiment" of former Gov. Sam Brownback, with budgets that both cut spending and increased taxes.
“By the time I stood before you as governor in 2019, Kansas was on life support,” she said. “The state had racked up record amounts of debt, schools had been cut to the bone, taxes on groceries had been increased until they were the highest in the nation, agencies had been decimated, and Kansas had generally become a national model for what not to do.”
Kelly said 12,400 jobs were added in 2019 and the unemployment rate in Kansas has dropped to its lowest rate in 40 years.
While Kelly touted the state's improving economy, she also highlighted some of its weaknesses, calling its aviation and agriculture industries "fragile." About 2,800 aviation employees will be laid off from aircraft parts manufacturer Spirit Aerosystems in a couple of weeks as a result of the shut down of the production of the Boeing 737 Max.
“Even as we speak, thousands of Wichita families are suddenly fearful that soon they may be unable to provide for their families,” Kelly said. “I instructed my Labor Secretary, Delia Garcia, to take an all-hands-on-deck approach to help workers, Spirit and other Kansas businesses that will be negatively impacted."
The governor also addressed the effect of U.S. trade and regional flooding on farming, noting that "farm incomes have dropped 50%" from a peak in 2013. Kelly urged the U.S. Senate to pass the United States Mexico Canada Agreement, a trade deal that already passed in the House.
Addressing state tax reform, Kelly said she wants to lower taxes on groceries, noting that the state has one of the highest sales tax rates on food in the country at 6.5%. She said it would be the start of an extended effort to reform the state's tax codes.
“I understand that any discussion of taxes is politically charged, but if we ever truly want to move forward, we must confront the stark inequities, outdated inefficiencies and expensive loopholes riddled throughout our tax code,” she said.
In 2017, the Legislature voted to end Brownback's "tax experiment" that exempted limited liability corporations and some small businesses from paying state taxes. The state's budget since then has continued to grow.
Kelly will likely face opposition to Medicaid expansion in the new legislative session by more conservative lawmakers, but it remains to be seen if they have the ability to stop it. Denning, who previously opposed expansion, worked with Kelly behind the scenes for months to put a plan together and has broad support for it in the Senate among Republicans and Democrats.
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