Kansas’ S&P credit outlook is now positive years after downgrade under Brownback

Kansas’ credit outlook is positive after years of downgrades brought on by budget shortfalls under former Gov. Sam Brownback, S&P Global Ratings said Tuesday.

The major credit rating agency affirmed its AA- rating for the state but improved its outlook for the state from stable to positive, indicating the agency could raise the rating in the next two years.

In a statement, Gov. Laura Kelly said the improved outlook would send a signal to businesses that Kansas is a “smart investment.”

“It is clear that we have put Kansas back on track by growing our economy and paying off debts. I will continue to promote fiscal responsibility and cut taxes for working families in a way that maintains a balanced budget,” Kelly said.

The changed outlook comes years after Kansas faced repeated credit downgrades between 2014 and 2017 as the state grappled with budget shortfalls in the wake of Brownback’s 2012 tax cuts. S&P changed Kansas’ outlook from negative to stable in 2018 after a bipartisan coalition of lawmakers overrode Brownback’s veto to mostly repeal the tax cuts in 2017.

In its report, S&P said it would be inclined to improve Kansas’ rating if the state continues to maintain healthy balances in its budget and demonstrates a commitment to making contributions to its pension system.

Unbalanced budgets and tax cuts that aren’t balanced by spending reductions, the report said, would result in a reduced outlook in the future.

Kelly is currently poised for a fight with the GOP-controlled Legislature over tax cuts. The state Senate passed a bill last week that would implement a 4.75% flat tax. The Democratic governor has compared the policy proposal to the Brownback cuts and said she would reject any tax policy she considers irresponsible.