Kansas governor signs $10 billion transportation plan

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Kansas Gov. Laura Kelly has signed into law a $10 billion transportation plan designed to maintain the state’s highways while supporting jobs in an economic downturn.

Senate Bill 173 won legislative approval last month as lawmakers were rushing to finish their work on the state budget so they could clear out of Topeka during the COVID-19 pandemic.

Kansas Gov. Laura Kelly signed the $10 billion, 10-year plan.

“This fiscally responsible program provides a visionary approach so that Kansas has the flexibility to address immediate needs and secure more opportunities for our future,” Kelly said. “Its swift passage is important to help the Kansas economy recover when this public health pandemic passes.”

Kansas Department of Transportation will manage the 10-year plan known as Eisenhower Legacy Transportation Program.

Instead of a once-a-decade, 10-year set list of projects, new modernization and expansion projects will be selected for the development pipeline every two years.

“We have a lot of work to do,” said KDOT Secretary Julie Lorenz. “Beyond identifying projects for the development pipeline to garner potential federal stimulus funds, we need to deliver projects faster and at the highest value for Kansas taxpayer dollars.”

The law specifies that new bonds issued for the program be paid using State Highway Fund revenues, including sales or compensating use tax revenues. Beginning July 1, 2021, the law allocates 16.154% of the 6.5% retailer’s sales tax to the SHF.

Kansas has general obligation ratings of AA-minus from S&P Global Ratings and Aa2 by Moody’s Investors Service, both with stable outlooks. Moody’s gives KDOT’s bonds the state’s general obligation rating because of strong legal support for debt service.

“We therefore expect annual coverage of highway revenue bond debt service, inclusive and exclusive of federal reimbursements, will remain strong,” Moody’s analyst Matthew Butler wrote in a July 18 report. “This is especially true given the current revenue picture and current debt service requirements.”

KDOT currently has $2.1 billion in debt payable from SHF receipts.

Later this month, lawmakers are expected to return to the Capitol to adjust a newly passed $19.8 billion state budget and complete unfinished legislative business.

Kelly signed Senate Bill 66, the state’s budget bill for Fiscal Years 2020 and 2021, on March 25, issuing no line-item vetoes.

“I appreciate the bipartisan work of lawmakers to approve a budget swiftly in the midst of an unprecedented global public health pandemic,” said Kelly. “I particularly commend legislators for approving $65 million to help support our coronavirus response efforts in Kansas.”

Excluding coronavirus-related expenditures, the Kansas Legislature spent about $100 million more from the State General Fund than Kelly initially recommended in January, with another $100 million in potential enhancements delayed until the omnibus budget.

“We’ve never experienced anything this sudden and severe in our lifetimes,” Kelly said. “As we get a handle on our new reality, I urge the Legislature to join me in showing fiscal restraint when they return for the annual wrap-up session. It is critical that we act with utmost caution until we get a better sense of what the true budget implications of coronavirus will be.”

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