TOPEKA, Kan. (AP) — Kansas Gov. Laura Kelly on Wednesday called for a new program to improve the state's roads and bridges, urged state lawmakers to approve a bipartisan Medicaid expansion plan and warned she is likely to veto the income tax cuts that Republicans are pursuing.
The Democratic governor provided the outlines of her agenda for the GOP-controlled Legislature's annual 90-day session during her State of the State address. But her second address since taking office a year ago was often a look back on her first year in office and a Republican predecessor's tax-cutting experiment that was followed by persistent budget woes.
Kelly promised her own tax cuts but signaled they would be modest initiatives to ease the burden of the state's sales tax on groceries for low-income families and to provide state aid to cities and counties in hopes that they'll decrease their property taxes. She also emphasized her support for a new trade agreement with Canada and Mexico approved by the U.S. House, and she urged the U.S. Senate to pass it.
Kelly spent much of her speech arguing that Kansas is starting to recover from nationally notorious income-tax cuts championed by former GOP Gov. Sam Brownback. Legislators reversed most of the cuts in 2017 and Kelly won the 2018 governor's race largely by campaigning against Brownback's policies.
“We have so many reasons to be hopeful tonight,” Kelly said. “But make no mistake: One year of progress cannot erase a decade of damage.”
Kelly's administration plans to release details Thursday morning of her proposed state budget for the fiscal year beginning July 1. The current state budget is $18.4 billion.
House Speaker Ron Ryckman Jr., a Kansas City-area Republican, said in a GOP's response that Kelly is determined to grow state government.
“No difference in our visions is more stark than this one,” Ryckman said. “She wants to grow spending and hopes that will grow the state.”
Yet, even as Kelly argued that the state had recovered from being “on life support,” she acknowledged that that the key agriculture and the aviation sectors of the state's economy remain “incredibly fragile.”
Kelly gave her speech less than a week after aircraft parts supplier Spirit AeroSystems announced 2,800 layoffs in Kansas, or 20% of its state workforce, mostly in Wichita. The layoffs followed Boeing's suspension of production of its troubled 737 Max aircraft.
Senate President Susan Wagle, a Wichita Republican, said what the state needs is for the federal government to determine how to get the 737 Max back in production.
“We need to get these people back employed,” Wagle said, adding that she is hoping "to have it solved” before unemployment benefits run out.
Lawmakers opened their sessionMonday with a bipartisan plan waiting for them to expand the state's Medicaid health coverage for up to 150,000 additional people. Kelly reached agreement last week with Senate Majority Leader Jim Denning, another Kansas City-area Republican.
Denning and other GOP leaders blocked an expansion plan that Kelly favored last year, citing concerns about its potential costs and how it would be administered.
“We are so close,” Kelly said. “Let's get this done.”
Denning's deal with Kelly is expected to clear the way for Kansas to become the 37th state to expand Medicaid. Wagle acknowledged as much during a post-speech news conference.
But Wagle, an expansion opponent, said some Republicans want to include a work requirement and language to ensure that public funds can't cover abortions. Some Republicans still worry about the long-term costs to the state, even though the federal government is set to cover 90%.
Kelly's call for a new transportation program came with the state winding down projects promised under a 10-year plan started in 2009, financed with bonds, vehicle registration, gasoline tax and sales tax revenues. The program was supposed to be worth $8 billion, but lawmakers siphoned off $2 billion to plug holes elsewhere in the budget.
Transportation Secretary Julie Lorenz and her staff have held months of community meetings and identified $18 billion in infrastructure needs.
“It's time for us to develop a new, comprehensive transportation plan so that we can rebuild roads and bridges across our state,” Kelly said.
The governor added what she called a “critical” condition: “stable state revenues.”
Rep. Sean Tarwater, a Kansas City-area Republican who serves on the House Appropriations Committee, was skeptical of starting a new transportation program.
“With Medicaid expansion on the horizon, I'm not sure we can afford it,” Tarwater said.
The Democratic governor and Republican leaders already were headed for another confrontation over income tax cuts after she vetoed two GOP tax bills last year. GOP leaders want to cut taxes for individuals and businesses now paying more in income taxes to the state because of changes in the federal tax code at the end of 2017 championed by President Donald Trump.
“We believe that's what's helped grow the economy across the nation," Wagle said.
Kelly promised to veto “any tax bill” that “throws our state back into fiscal crisis.” She had argued that last year's GOP tax bills would “decimate” state government.
“We simply cannot go back,” she said.
Kelly, an abortion rights supporter, didn't mention an issue of prime importance to many Republicans: Overturning a Kansas Supreme Court decision last year protecting abortion rights. They're pursuing an amendment to the state constitution to allow lawmakers to regulate abortion as they have in the past, with a raft of restrictions before Kelly took office.
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