Kelly Administration Pays Off Transportation Debt Early, Saving Taxpayers $22.2M
TOPEKA – Governor Laura Kelly announced today that for the first time ever, debt issued by the Kansas Department of Transportation has been paid off early, resulting in a savings of $22.2 million in interest payments. The Kelly Administration was able to pay off the debt due to strong state revenues and its work to close the Bank of KDOT.
“Kansas taxpayers continue to see the benefits of our fiscal responsibility,” said Governor Laura Kelly. “By closing the Bank of KDOT and balancing the state budget, my administration has saved taxpayers millions of dollars – all without compromising the quality of our state infrastructure.”
The now-retired C Series bonds issued to KDOT in 2012 initially had a principal of $200 million. This summer, KDOT was able to pay off the remaining $97.8 million in principal of the 20-year bond, thus saving $22.2 million in interest. The bond was retired with current cash flow and without negatively impacting existing programs or construction projects as part of the Eisenhower Legacy Transportation Program (IKE). Under the Kelly Administration, KDOT has increased construction lettings by 300 percent across the state.
From 2014 through 2018, under the Brownback Administration, the state transferred more than $1.7 billion from KDOT to other parts of the state budget – a practice known as raiding the “Bank of KDOT.” The state budget for fiscal year 2023, as approved by the Kansas Legislature and signed by Governor Kelly last April, did not include a transfer out of the agency and effectively closed the Bank of KDOT.
“We are always mindful that this not KDOT’s money; it’s the taxpayers’ money and we have responsibility to manage it in a way that generates the most benefit for Kansans now and in the future,” said Transportation Secretary Julie Lorenz. “Saving Kansans $22 million and delivering IKE projects as promised is testament of that and I want to thank all our KDOT workers who worked hard to make this happen.”
KDOT has had the authority to issue debt to ensure necessary cash flow since 1992. On a 20-year bond, refinancing or full payment can take place at the 10-year mark. This was the first time the agency was able to pay off a highway bond early. To date, KDOT has not issued bonds during the IKE program.
“KDOT focuses on making sound financial and investment decisions that allow the agency to be good stewards of state resources,” said Pam Anderson, Interim Director of Fiscal and Asset Management. “Saving money and spending wisely go hand in hand to make every dollar count.”