House Committee on General Government Budget 01/27/2026

Budget Recommendations for OITS

Overview of Budget Requests

• The Office of Information Technology Services (OITS) requested $34 million for FY 2026, with $31.2 million from the State General Fund (SGF), marking a $300,000 increase from the previous year's approved budget.

• For FY 2027, OITS revised its request to $41 million, including $39.5 million from SGF, reflecting a significant increase of $7.4 million primarily due to enhancement requests related to data center services and additional FTEs for non-cabinet agencies.

Off-Budget Requests and Enhancements

• The off-budget request for FY 2026 was set at $82.2 million, an increase of $15.7 million driven by cost indices and realignment of positions within the organization.

• In FY 2027, the off-budget request rose to $85.4 million, which included a notable increase in funding for data center services that had not been accounted for in the previous year’s budget.

Comparison with Governor's Recommendations

• A comparison between the special budget committee's recommendations and the governor's showed that only one on-budget FTE was deleted by the committee while retaining other enhancements proposed by OITS.

• The committee did not include certain enhancements such as an additional $8 million or two positions aimed at supporting non-cabinet agencies lacking IT resources.

Data Center Service Contract Explanation

• An explanation was provided regarding an additional one-time cost gap of $8 million needed for a new data center service contract; this amount is necessary due to underestimations in initial budgeting.

• This one-time enhancement will shift costs onto other state agencies using these services rather than being absorbed into OITS' budget directly.

Committee Actions and Future Considerations

• The committee discussed approving budgets without including certain enhancements; specifically noting that if they concurred with recommendations, it would exclude the previously mentioned enhancements.

• Questions arose about future projections beyond 2027 concerning efficiency measures and how appropriations would be justified based on current funding levels as presented by Jeff Maxson, Chief Information Technology Officer.

This structured summary captures key discussions around budget proposals and decisions made during the meeting regarding OITS while providing timestamps for easy reference back to specific parts of the transcript.

Budget Proposal Discussion

Legislative Budget Committee Recommendations

• The committee discusses the removal of enhancements from the budget proposal, emphasizing a focus on finding efficiencies and ensuring consumption-level appropriateness.

Motion to Accept Budget Proposal

• Representative Pickert motions to accept the OITS budget proposal for 2027, which includes deleting 1.0 FTE and an $8 million enhancement. This indicates a shift towards streamlining resources.

Vote on Budget Proposal

• A vote is called after discussion; all in favor say "aye," and the motion passes without opposition, indicating consensus among committee members regarding the budget adjustments.

Department of Revenue Overview

Fiscal Year 2026 Analysis

• Jacob Klespie presents an overview of the Department of Revenue's budget, highlighting a spending amount of $128.7 million approved by the legislature for fiscal year 2025 along with 1,039.2 FTE positions.

Supplemental Requests Breakdown

• The agency requests include several supplemental increases:

• $920,000 for operational needs.

• $4 million for digital license plate conversion costs.

• $2.5 million for contractual services related to production updates.

Adjustments in Salaries and Expenditures

• There are notable decreases in salaries and wages totaling $923,000 due to shrinkage allocations; however, there is also an increase request of $1.5 million primarily for license plate production expenses.

Enhancements and Financial Distribution

Enhancement Requests Overview

• The agency has submitted two significant enhancement requests:

• A $4 million request for digital license plates.

• A $1.7 million request aimed at improving licenses and ID cards distribution processes.

Fund Distribution Insights

• New documents illustrate how funds from new license plate purchases are distributed across various state funds and counties, providing transparency into financial flows within the Department of Revenue operations.

Historical Data Presentation

• Previous data shows actual expenditures related to license plates from fiscal years 2023 through 2026, revealing trends such as increased production during specific periods funded by ARPA funds compared to regular operating budgets.

LBC Shorthand and License Plate Costs

Overview of LBC Changes

• The document includes a white sheet detailing the LBC shorthand, which outlines significant changes made by the LBC, including the removal of enhancements and FTE increases.

• A yellow sheet presents the governor's recommendations reflecting her adjustments based on the LBC's decisions. Questions regarding these documents are welcomed.

License Plate Cost Analysis

• The cost for license plates has more than doubled compared to previous years, with quantities rising from approximately 30,000 in FY2023 to between 40,000 and 50,000 in FY2024.

• Historical data shows that after an increase due to ARPA funds, demand for license plates did not revert to historical averages (mid-60,000s), leading to increased costs as monthly requests rose from about 45,000 to 65,000.

Legislative Concerns

• Representative Melton expresses concern over spending $4 million of taxpayer money on a problem he believes is non-existent and emphasizes the need for legislative change.

• Discussion highlights that current processes require statutory changes; issues stem from how orders are placed and processed within transportation systems.

Proposed Solutions

• There is consensus among representatives that addressing these issues requires legislative action in transportation before any financial assistance can be considered.

• A motion is proposed stating that starting FY2027, all mailing and printing costs for vanity plates should be borne by purchasers. K-DOR will conduct a cost analysis for Kansans.

Amendments and Further Discussions

• Representatives discuss whether proposed amendments would override existing statutes concerning license plate fees.

• Suggestions arise about adjusting budget allocations related to driver's licenses alongside license plates as part of ongoing discussions about funding mechanisms.

Final Considerations

• The committee deliberates on combining provisions for both driver's licenses and license plates into one comprehensive proposal.

• Clarification sought regarding whether personalized or regular plates incur different mailing costs; representatives emphasize understanding these distinctions as they move forward with proposals.

Discussion on License Plate Legislation

Initial Proposal and Limitations

• The speaker suggests limiting the current discussion to vanity and personalized license plates, emphasizing the need for clarity in the proposal.

• A recommendation is made to restrict changes until after the upcoming election cycle, indicating a desire for stability during transitions.

• A substitute motion is introduced to cover all types of license plates and IDs, highlighting concerns about workload distribution among departments.

Workload Concerns

• The speaker expresses concern that adding driver's licenses to the proposal would significantly increase workload, especially given it’s an outgoing year for the department.

• There is a call for a discussion regarding costs associated with managing thousands of plates within a limited timeframe.

Financial Implications

• The speaker notes that if only vanity plates are addressed, it may simplify processes but acknowledges financial burdens still exist within the agency.

• Questions arise about the cost per plate; it's noted that selling at a loss isn't sustainable for state operations.

Simplifying Proposals

• A colleague supports focusing solely on specialty plates this year as a practical approach amidst operational challenges.

• Clarification is sought regarding whether driver's licenses should be included in discussions; emphasis remains on keeping matters linear and straightforward.

Finalizing Motion

• The speaker urges simplicity by sticking to specialty vanity plates due to limited resources available in an outgoing year.

• Ultimately, there’s consensus to revert back to covering only personalized and vanity plates for FY 2027, ensuring mailing and printing costs will be borne by purchasers.

Cost Analysis for Kansans' License Plates

Discussion on Cost Savings

• The Department of Revenue is tasked with providing a cost analysis to determine the annual savings for Kansans regarding license plates.

• Representative Robinson inquires about whether commercial plates are included in the cost analysis, indicating a need for clarity on what types of plates are being discussed.

Types of License Plates

• The focus is on vanity and personalized plates, as they present the most significant issues; commercial plates follow different regulations.

• Representative Amex clarifies that standard license plate holders will not face changes unless opting for vanity or personalized options, emphasizing the financial aspect involved.

Revenue Estimates and Projections

• There is a call for estimates from the Department of Revenue regarding potential savings from vanity plate replacements.

• A rough estimate indicates that all types of license plates have been accounted for, but specific savings figures remain unclear.

Total Plates Sold and Financial Implications

• Questions arise about total license plates sold annually; December 2026 data shows 40,867 plates sold.

• Average sales indicate around 28,000 vanity plates per month, leading to significant monthly costs associated with these specialty items.

Cost Breakdown and Legislative Considerations

• The average combined cost (including shipping) for vanity plates is estimated at $341,000 monthly. This translates into substantial yearly savings if adjustments are made.

• Discussions highlight that this motion could impact state finances by approximately four million dollars due to changes in vanity plate pricing structures.

Legislative Budget Review

• Representative Riley suggests reviewing caps on fees similar to other agencies to ensure fair pricing without sudden increases.

• A motion is made to accept the Kansas Department of Revenue budget for 2026 amidst ongoing discussions about legislative pay shortfalls.

Legislative Budget Discussion Overview

SB 121 and Agency Specific Increases

• The discussion revolves around SB 121, questioning whether adjustments need to be made with each budget or if they will be applied globally. Clarification is sought on the nature of a legislative pay increase shortfall requested by the agency.

• It is noted that additional funds have been reallocated within the agency concerning license plates, which includes part of the legislative pay increase. This adjustment is unique to this specific agency and will not affect others.

Reappropriation and Fiscal Year Adjustments

• The SGF reappropriation of $17,042 from unspent fiscal year 2025 funds is intended for operational costs in fiscal year 2026.

• A global motion was previously established to lapse 1.5% of SGF funding across all agencies in fiscal year 2025, with discussions about restoring these amounts for fiscal year 2027.

Closing Out Budgets

• There are considerations on whether to close out budgets for fiscal years 2026 and 2027 independently or together.

• A motion is proposed to close out fiscal year 2026 with amendments related to license plate adjustments while also preparing for discussions regarding fiscal year 2027.

Funding Adjustments and FTE Deletions

• Representative Riley proposes a motion to accept the SBC recommendation for FY 2027 while suggesting significant deletions of Full-Time Equivalents (FTEs), totaling approximately $5.6 million in savings.

• The proposal includes deleting various FTE positions across multiple programs, emphasizing that these are currently unfilled positions.

Concerns Regarding Rural Impact

• Concerns are raised about how eliminating these positions may impact rural Kansans, highlighting potential challenges in service delivery due to reduced staffing levels in less populated areas.

Discussion on Unfilled Positions and Their Impact

Concerns About Deletions and Numbers

• Representative Ohavison is asked if there is a specific number of positions he feels comfortable with regarding potential deletions.

• A concern is raised about the impact of eliminating positions on services provided to citizens in rural Kansas, questioning whether all positions are located in one area or spread across the state.

Evaluating Unfilled Positions

• Representative Van Houden suggests starting discussions with unfilled positions before making broader decisions, advocating for a thoughtful approach.

• Representative Amix supports focusing on unfilled positions first and questions if the motion's maker consulted the department about service impacts statewide.

Rural Services and Administrative Costs

• Representative Riley highlights that much work in rural Kansas is done by county personnel rather than state employees, noting administrative costs where some administrators earn significantly more than others.

• There’s an emphasis on how many responsibilities fall to county workers instead of the Department of Revenue, raising concerns about service impacts from position eliminations.

Substitute Motion Proposal

• Representative Nhanhoun proposes a substitute motion to eliminate unfilled Full-Time Equivalents (FTEs), suggesting a careful approach rather than drastic cuts.

• The discussion continues with clarification needed on which unfilled positions are being targeted for elimination.

Department's Position on Vacancies

• Mark Burkart, Secretary of Revenue, states there are approximately 33–34 vacant positions due to funding constraints necessary for covering increased operational costs.

• He explains that these vacancies are critical as they include essential roles like driver's license examiners and revenue recovery staff who contribute significantly to state funds.

Financial Implications of Vacant Positions

• The importance of maintaining certain open positions is stressed; each revenue recovery employee collects significant delinquent debt for the state.

• Burkart warns that complaints from constituents will arise due to longer wait times at driver's license stations if these key roles remain unfilled.

• Last year, $292 million was collected from delinquent debts; this fiscal year aims for $320 million. Open positions directly affect these collections and overall state funding.

Budget Discussion and Recommendations for the Kansas Department of Revenue

Excessive Demand for License Plates

• The department is facing challenges due to high demand for license plates, which they cannot charge for. This situation has financial implications that need addressing in the upcoming year.

• There is a suggestion to amend current plans and focus on unfilled positions temporarily, with hopes of better financial management next year.

Concerns Over Financial Management

• Representative Riley expresses concern that if this were a business, layoffs would be necessary due to negative financial indicators ("red ink"). This highlights the urgency of addressing budget issues.

• Riley indicates he will not support the substitute motion due to these concerns about open positions and overall fiscal responsibility.

Voting Process on Budget Proposals

• A call for discussion precedes a vote on the substitute motion; representatives are asked if they wish their votes counted, ensuring transparency in the voting process.

• The chair confirms that there are no further discussions before proceeding with the vote, indicating readiness to finalize decisions regarding budget proposals.

Motion Regarding 2027 Budget

• Representative Riley clarifies that his earlier motion included changes in Full-Time Equivalents (FTEs) as part of accepting the SBC budget for 2027, emphasizing its importance in discussions moving forward.

• It is noted that separate motions are required to close out budgets since previous motions did not encompass this action adequately. This reflects procedural adherence within budget discussions.

Finalizing Budget Recommendations

• A new motion is made by Representative Pickert to align with LBC recommendations while also lapsing open FTE positions within the Department of Revenue, indicating strategic adjustments based on current needs and recommendations from oversight bodies.

• The committee's decision aims at balancing operational efficiency with fiscal responsibility as they navigate through budget constraints and staffing considerations.