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Archive for Thursday, January 16, 2003

A rainy day

January 16, 2003

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The budget presented by the new Kansas governor includes no tax increases and almost no room for error.

To whatever extent Kansas has put money away for a rainy day, that day, according to Gov. Kathleen Sebelius' budget, has come.

The budget the governor presented Wednesday night made good on her campaign promises to maintain funding for K-12 and higher education without raising state taxes, at least for now. To accomplish that goal, however, required some extraordinary measures, most notably cutting the state's ending balance -- the budget reserve -- essentially to zero.

The good news, at least relatively speaking, in the Sebelius budget is that it will maintain funding for public K-12 schools and higher education at current levels. For public schools, that's $2,863 per student, the level after cuts were made by Gov. Bill Graves. Higher education also will stand pat with funding after Graves' cuts and will go another year without the extra funding for teacher salaries and other items promised in the Higher Education Coordination Act.

In a year when that passes for good budget news, the Kansas Department of Transportation may be the big loser. The Sebelius budget to finish out the current fiscal year retains the $94 million the general fund borrowed from KDOT this year, and the budget for next year calls for no new highway funding. On top of that the governor is calling on KDOT to save $5 million in its operations next year while using $25.2 million from the state highway fund to cover operation of the Kansas Highway Patrol, which previously had come out of the general fund.

During a budget briefing on Wednesday, the governor said she recognized the highway fund "is not an unending source of revenue," but said the highway fund is big enough now to allow some projects to move forward without additional funding.

Although city and county governments around the state will receive their usual highway funds from the state, they will be chagrined to learn they will receive no money from the state general fund in the Fiscal Year 2004 budget. For most local government units the state funds amount to about 2 percent of their total budget, according to Budget Director Duane Goodness. That's a small percentage, but it's a significant dollar amount for cities and counties to make up.

The governor's budget also eases the funding situation for the Department of Social and Rehabilitation Services by restoring most of the funding cut by Graves. It avoids closure of any Department of Corrections facilities and provides for a 1.5 percent salary increase for state employees. Again, it's not much, but it's more than they got this year.

The bottom line of the budget, however, is razor thin. The governor's plan to finish the current budget year calls for spending of $4.35 billion with an ending balance of just $400,000. For the next fiscal year, the governor projects spending of $4.45 billion with an ending balance of $500,000. Those ending balances represent 0 percent of the budget total; unless the requirement is waived, state statutes call for an ending balance of 7.5 percent.

The larger ending balance often is cited as important to the state's bond rating, but the governor thinks that given the dire budget situations most states now face, rating agencies will understand Kansas' plight. She also said the 0 percent ending balance "is not where I see us ending the puzzle." The Legislature approved a budget last year with an ending balance of about 5 percent, and the new governor sees the possibility of negotiation on the ending balance figure.

Sebelius told editorial writers on Wednesday that a new governor has the right to wait up to three weeks to present a budget. She said she thought it was "better to get something on the table" so the budget process can begin.

So the plan is on the table. It certainly provides targets at which legislators can take aim, but, if Sebelius is determined to move forward with no tax increases, it's a reasonable starting point for the governor and legislators in what is bound to be a difficult year of budget negotiations.

In general, however, the Sebelius plan seems to put the state in a holding pattern in hope times will get better and tax revenues will improve enough to address the growing number of budget needs. The plan also will allow Sebelius to place the blame for any tax increases on Republican legislators. Although her budget is a risky plan, she can say she didn't call for tax increases or cuts in education. The question is what the cost would be to the state and its people if GOP legislators allow her plan to become reality.

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