By: Tim Carpenter
Kansas Reflector
TOPEKA — The state of Kansas’ credit rating upgrade from stable to positive by a leading financial research firm set off a scramble among politicians claiming responsibility for the improved outlook.
Gov. Laura Kelly, a Democrat, said the adjustment by Moody’s Investors Service was associated with her administration’s work to build a $2 billion emergency fund, spend surplus funding on one-time projects, pay the government’s bills on time and broadly restore faith in the state’s ability to manage its finances.
Kelly contrasted her administration’s performance to the financial peril that existed during Republican Gov. Sam Brownback years in office. In 2016, before the Legislature repealed much of Brownback’s 2012 income tax agenda to restore fiscal integrity to the budget, Moody’s dropped the state’s credit rating from stable to negative.
“Moody’s upgraded positive outlook is a reflection of the hard work done over the last eight years to undo the damage created by the previous administration,” Kelly said. “We must remain fiscally disciplined if we are to continue on this strong economic path.”
House Speaker Dan Hawkins, a Wichita Republican, said the GOP-led House was responsible — in collaboration with the Senate — for reforming the state budget process and controlling spending growth. He said the rating upgrade from Moody’s conflicted with the governor’s warnings about the Legislature’s “so-called dangerous budget trends.”
“Moody’s upgrade is a direct validation of the disciplined budgeting approach House Republicans fought for, despite constant attacks and fearmongering from the governor’s administration targeting this exact topic,” he said.
During the 2026 session of the Legislature, Republicans and Democrats raised alarms about state budgets that spent more annually than the state collected in tax revenue. Over a three-year period, Kansas has burned through $1.1 billion in reserve funding. Members of both political parties characterized the state’s spending, compared to revenue, as unsustainable.
The statement by Moody’s said the move from stable to positive for Kansas was tied to a budget stabilization fund holding about 20% of the state’s annual general treasury expenditures and the series of annual contributions to the Kansas Public Employees Retirement System that were at or near full actuarial amounts. In the past, the Legislature directed state dollars away from KPERS and raised the unfunded liability of the pension system.
The Moody’s evaluation took into account tax changes placed into Kansas law in 2024 and 2025. Last year, state legislators sidestepped the governor’s objection to implement a policy that could lead to a flat 4% individual income tax rate. In 2024, Kelly and legislative leadership agreed to a tax-reduction package designed to reduce state revenue by billions of dollars.
“Tax reduction initiatives have remained a key legislative objective,” Moody’s said, “but fiscal impacts of recent policy changes should be manageable, provided the state adheres to statutory guardrails and uses its careful revenue monitoring and management to address adverse conditions when they materialize.”
Moody’s said factors that could lead to a future downgrade in the rating included “state spending that persistently outpaces economic and revenue growth, accelerating reserve depletion.”
Further upgrades in Moody’s rating could be accomplished by Kansas through maintenance of strong financial reserves, progress on reducing KPERS’ unfunded liabilities and positive economic conditions.
The report from Moody’s mentioned the state’s economy was concentrated in agriculture and manufacturing, which left the state “vulnerable to the global trade effects” of U.S. tariff hikes imposed by President Donald Trump and the ongoing U.S.-Israel war against Iran.