In Kansas, sweeps to continue

Even though the Kansas Legislature raised taxes, sweeps from the highway fund will continue.

Why did the legislature and governor raise taxes in Kansas? One reason cited by many is the need to stop “robbing the highway fund.” This refers to transferring (“sweeping”) money from a fund in the Kansas Department of Transportation to the state’s general fund, where the money is then spent on things besides highways. There was bipartisan agreement that this practice should stop. Highways were falling apart, it was said, even though spending on major road maintenance programs continued at about the same level. ¹

The real danger in transferring money from the highway fund is that KDOT borrows money — a lot of money. And instead of that money being spent on long-lived assets like roads and bridges, that borrowed money is spent on current consumption.

But: Guess what? Transfers from the highway fund to the general fund are scheduled to continue for another two years, based on the budget passed by wide margins in both chambers of the legislature. ²

Language in the budget calls for quarterly sweeps totaling $288,297,663 in fiscal year 2018, with the first sweep on July 1, 2017. ³

For fiscal year 2018, the total of the quarterly sweeps is $293,126,335. ⁴

There are several ways to look at these transfers. We might look at it as reclaiming from the highway fund some of the sales tax the state collects. That amount has grown. In 2006 the transfer of sales tax revenue to the highway fund was $98,914 million. In 2016 it was $517,698 million, an increase of $418,784 million or 423 percent. ⁵

But if the legislature wanted to alter the transfer of sales tax, it could have done so by altering the law that specifies the rate of transfer. That promotes transparency.

The budget authorizes the transportation department to borrow up to $400 million in each of the next two fiscal years. There will be pressure to issue those bonds.

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