Archive for Sunday, September 22, 2002

s financial crisis?

September 22, 2002

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— One wants a top-to-bottom review of state government; the other pledges not to raise taxes.

Aside from that, the major political party candidates for governor  Democrat Kathleen Sebelius and Republican Tim Shallenburger  are saying little about how they would solve the state budget problem.

The answers the candidates offer  at least according to some lawmakers and other experts  amount to "nips and tucks" in a budget that needs major alterations to keep the state working.

The next governor will inherit an ailing $4.4 billion state budget that has been propped up by emergency cuts, tax increases and one-time funding sources. Even with all the financial triage, the budget has nothing in reserve.

"Just to stay at zero, not even have a dollar in the bank, the approved budget has to be pared back some more. It could be $100 million or more," said Duane Goossen, Gov. Bill Graves' budget director. "And then the new governor will prepare a budget for fiscal year 2004 (which starts July 1, 2003). Presuming the current year budget gets cut back enough to zero, the next year's budget probably has to be cut back even further."

Goossen said the state also must spend more to cover the increasing numbers of Kansans served by Medicaid, state employees' retirement benefits and increases in health insurance.

Some budget experts have said the state is looking at a potential $600 million gap between revenue and spending.

Candidates' answers

Asked repeatedly on the campaign trail how they will manage this problem, Sebelius and Shallenburger stick to a tight script.

Both say they will ferret out waste and inefficiency.

Both have said they will go after $150 million in Medicaid fraud. And both have said the budget of the Kansas Department of Administration needs scrutiny.

Shallenburger has pledged to cut 10 percent from the governor's budget.

Sebelius has said she would not cut funds to public schools, which is half the state budget. Shallenburger has said schools could take a 3 percent cut if the alternative is a tax increase; but recently Shallenburger has said he would hold schools "harmless."

State Rep. Kenny Wilk, R-Lansing, and chairman of the House Appropriations Committee, said neither candidate was addressing the problem.

"I don't think they have any idea about what they are going to do," Wilk said. "They're talking nips and tucks. We were beyond that 18 months ago."

Wilk said the candidates were evading tough questions on the budget for obvious political reasons. They don't want to make voters unhappy, and the solutions to the state budget crisis will require tough decisions that make lots of people unhappy.

The primary

In the Republican Party primary, Shallenburger and his no-tax pledge won handily against two well-financed political veterans, Senate President Dave Kerr of Hutchinson and Wichita Mayor Bob Knight, both of whom stated that new taxes must be considered if the alternative was cuts to public schools and social services.

"I think Dave Kerr and Bob Knight were pretty straightforward, and you can see where that got them," Wilk said.

Sebelius faced no primary opponent. And while she has refused to take a no-tax pledge, she has said that tax increases are not an option.

So how realistic are their proposals in getting the state's finances in order?

On the issue of Medicaid fraud, both candidates are depending on a state audit from earlier this year that said Kansas officials were doing little to pursue potentially fraudulent Medicaid claims and that national statistics indicated about 10 percent of Medicare and Medicaid payments were fraudulent.

At that rate, more than $138 million of the state's Medicaid claims are potentially fraudulent, the audit stated, although it provided no evidence that was the case. Officials with the Kansas Department of Social and Rehabilitation Services have said fraudulent Medicaid claims in Kansas come nowhere near the 10 percent figure.

Other tweaks

As far as cutting the governor's office budget, the office has been cut over the past couple of years and is now funded at $1.7 million annually from the state general fund. A 10 percent cut would yield $170,000.

As for the Department of Administration, the agency exists primarily to provide services to the rest of state government. It administers payroll, insurance, leases and numerous other tasks that help run the bureaucracy.

Its current annual budget of $28.3 million from the state's all-purpose tax fund has decreased 10.6 percent in the past four years, according to a budget analysis provided by the department.

But its "off-budget" spending has increased 25 percent during the same period, according to the same analysis.

Ben Baumon, a spokesman for the department, said many of the "off-budget" expenses were not counted as official expenses because they were accounted for in other agency budgets.

Sebelius said the basis of her approach to controlling spending would be to conduct performance audits of all state agencies, such as has been done in other states.

Sebelius said the audits would be ongoing during the 2003 legislative session, identifying short-term and long-term ways to save money, how the state could draw more federal dollars and possibly propose new revenue sources, such as expanded gaming opportunities. These savings and new revenues would be plowed back into education and health care, she said.

Shallenburger has said the bottom-line on the budget is that there will be no tax increase, that state agencies can be reconditioned and down-sized to save money.

"When my dad and mom sat around their kitchen table, not only did they pay their big bills first, they would figure out how much money they had and then they would spend that amount of money. In Topeka, what they do is they try to figure out what they want and then they go out and get the money to pay for it," he said.

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