The governor offered his perspective on how the state developed budget problems following a meeting with Free State High School teen-agers.
Gov. Bill Graves said Friday that the state discovered the hard way a wicked formula for budget woe: a mix of generous tax cuts, significant spending increases and a flawed revenue projection.
"First, of course, we had aggressive tax cuts and have aggressively spent money over the last five years," he said during a visit to Free State High School in Lawrence.
Graves said those actions, combined with an inflated estimate of tax collections, led him this week to propose a $43 million cut in the state's current budget. It represents 1 percent of spending from the state general fund, with payments on bonds and teacher pensions exempted.
The governor said a decision by the 1999 Legislature to earmark millions of dollars for higher education and the public schools didn't leave much wiggle room in the budget. Lawmakers were willing to walk a narrow line because state revenue had expanded by impressive amounts during the past few years.
Unfortunately, Graves said, the state based its budget on revenue growth projections that were too optimistic. The state ended the 1999 fiscal year June 30 with $73.4 million less than expected in the general fund because of flagging tax collections.
Graves said he raised the possibility of budget cuts now to give state agencies as much time as possible to adjust spending blueprints.
He said his preference was to swallow modest budget adjustments over two consecutive years rather than absorb a single massive reduction next year.
"The problem would have been worse without the $70 million in tobacco settlement money we agreed upon as reasonable to pull for the state general fund," Graves said.
-- Tim Carpenter's phone message number is 832-7155. His e-mail address is tcarpenter@ljworld.com.
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