Actually there is a lot you can do for that budget if you can weld and grind. Keep the RPM's to about 5000 max and you avoid needing the spendy stuff.
Remove Governer - Free
Leave the standard carb, just change the main jet or ream it to size if required. Dont worry about filters yet, stock will be ok.
Clean up the ports in the head with a dremel, just a light cleanup so everything matches up, dont go hogging material out. Work on smoothing around the guide and the port/seat transition.
Build Yourself a header, youll need a flange and some pipe. Scrounge Ebay for a bike muffler etc.
Advance the timing to around 30 degrees, file the key.
Vegas Carts has a cam for $50, its not a big power cam but extends the power range nicely, just more ridable IMO.
Put some better single valve springs in.
Get a buddy with a mill to take about 0.100 off the head. Any small machine shop should be able to do this cheap.
It wont be a screamer but will be grunty and fun. My motor in my kart is pretty similar to that with the exception of a bigger carb and higher ratio rockers. Makes about 23hp @ 5500rpm. I Have the billet rod and flywheel as wheel, but keep the revs down a bit and you dont need them. Big blocks get expensive when you want a serious race engine, I have the parts collected to build a 40hp motor and I wont scare you with the $$.
