Topeka ? A conservative group Tuesday said state officials used Enron-like accounting practices to conceal the true size of the state budget and justify the need for a tax increase. Gov. Bill Graves’ administration denied the accusation.

“There is nothing dishonest going on here,” Graves’ budget director Duane Goossen said.

But the Kansas Policy Research Institute, a Topeka-based advocacy group, said the Graves administration and the Legislature had moved “off-budget” hundreds of millions of dollars.

“On the surface, it looks like the state’s general fund spending lately has been flat,” said institute board member Gayle Mollenkamp of Quinter. “But we have a large, real deficit, and it’s due to disguised spending that’s like the falsely portrayed profits of major companies.”

The sleight of hand was accomplished by removing from official budget documents references to enough expenses that it appeared state revenues and expenses were balanced. That allowed leaders to claim they held the line on spending but still needed a tax increase to support a no-growth budget. Graves and lawmakers approved nearly $300 million in new taxes that took effect July 1.

In reality, state spending increased nearly 8 percent, or $347 million, from what the official budget documents showed, according to the institute. Its figures rely on numbers provided by the Kansas Legislative Research Department, the research arm of the Legislature.

‘Stifling debate’

By moving spending off-budget, “You are stifling public debate. You are hiding facts from the public,” said Bob Corkins, executive director of the institute.

Former state Rep. Peggy Palmer, a Republican from Augusta who recently retired from the Legislature, put it this way: “It’s called budget manipulation.” She was one of the conservative lawmakers who pressed legislative staff for information on expenses that had been moved off-budget.

Told the analysis found that more than $600 million in spending had been hidden in the past two years, Palmer said she was flabbergasted. “It seems very wrong. We need a new budget process,” she said.

She said the increased sales, cigarette, gasoline and inheritance taxes approved by slim majorities in the Legislature earlier this year never would have passed if true spending numbers had been evident.

“Legislators are not getting the information that they need. Many did not realize what was going on,” Palmer said.

According to Graves and other state leaders, the budget for the current fiscal year is $4.4 billion, an actual decrease from the past fiscal year.

But according to the institute, if off-budget spending is added to the budget, the state total is $4.8 billion.

Figures not in dispute

The off-budget spending includes transfers of tax dollars from state coffers to cities, counties and inter-state funds. The transfers are actual expenditures of state dollars and have traditionally been counted as spending, Corkins said.

But through budgeting trickery, the transfers have been moved off-budget and are not reflected in the budget figures given to the public and legislators, he said.

Goossen, Graves’ budget director, did not dispute the figures cited by the institute as having been moved from the total of the state’s all-purpose tax fund, called the state general fund.

But Goossen said the decisions to move those dollars were all made by the Legislature and debated in open hearings.

“There was no subterfuge. All things have been aired out,” he said. Taking the transfers of tax dollars to cities and counties  called demand transfers  out of the state general fund was done to lower the required amount the state must hold in its ending balance, he said.

He agreed with the institute that comparisons of state budgets from year-to-year “are not perfect” because of the different ways the state general fund was counted.

But, he said, regardless how the budget was counted, the state was still short on revenue and needed the tax increases.