Study shows Kansas traditionally walks a tight fiscal line

States ranked by fiscal surpluses or deficits, 2002-2015. Source: Pew Charitable Trusts.

Kansas has done a relatively decent job of balancing its revenues and expenses over the last 14 years, according to a new national study that rated all 50 states for their budget-balancing skills.

The new study from the Pew Charitable Trusts shows that while the state ran a net positive balance of revenues over expenditures from 2002 through 2015, it was a relatively thin one of just 1.2 percent, ranking Kansas 33rd among the 50 states.

Still, that was better than the 11 states that ran negative balances over that time. New Jersey had the worst financial performance over that period, with revenues accounting for just 92.4 percent of expenditures.

What’s interesting about the numbers, says Matt McKillop, the Pew analyst who authored the report, is that the numbers don’t come from reported budgets, which can often mask over deficits with different kinds of accounting tricks. Instead, the report used each state’s “Comprehensive Annual Financial Reports,” or CAFR’s, which are based on what is called an “accrual” form of accounting rather than cash-basis accounting, such as delaying a payments from one fiscal year into the next or accelerating revenue collections, which Kansas has done numerous times over the years.

“What it does is really give a big-picture look at whether state government as a whole has lived within its means,” McKillop said during a phone interview Wednesday. “This takes, for many states, a wider view than the general fund or the budget would.”

McKillop said the study went back to 2002 because that’s when the Governmental Accounting Standards Board started requiring states to use the accrual form of accounting in their annual reports. The 14-year period covered two national economic recessions: one caused by the dot-com bubble burst in the early 2000s, which some call the post-911 recession; and the Great Recession of 2008-2009.

According to the analysis, Kansas ran deficits in five of those years. Three were during the first recession, 2002-2004, which spanned the transition between Republican Gov. Bill Graves and Democratic Gov. Kathleen Sebelius. Kansas had another deficit year in 2009 at the height of the Great Recession.

The fifth, however, occurred in 2015, a year of relative economic health nationally. Many have blamed the tax policies championed by Republican Gov. Sam Brownback for damaging the state’s financial position. Brownback and his allies, though, have blamed it on what they call a “rural recession” brought on by low energy and farm commodity prices.

Kansas was one of only seven states that ran a deficit that year. The others included Alaska, Illinois, Louisiana, Massachusetts, New Jersey and Oregon.

“Illinois and New jersey found that their revenue came in below expenses every year, so that trend just continued for them in 2015, but yes, it was unusual for a state to have a deficit in 2015,” McKillop said.

McKillop said the study only looked at states in terms of whether their revenues were above or below 100 percent of expenses. For those like Kansas that were above 100 percent, he said there is no particular standard for how far above that mark they should be.

Those like Alaska, Wyoming and North Dakota that all had very large surpluses he described as “resource rich” states that typically use those surpluses to cushion themselves between the economic booms and busts of the oil and gas industries.

In fact, Alaska, which had the largest surplus overall during the 14-year period, had a horrible year in 2015, when its revenues came in just under 70 percent of expenses.

Other states with more diversified economies, he said, may take a more conservative approach and balance their revenues and expenses as closely as possible.