After years of selling bonds and juggling accounts to avoid a tax increase, the state is fast running out of money.

“Since the late 1990s, our revenues haven’t been enough to sustain our operations at the current levels,” said Rep. Bruce Larkin, D-Baileyville, a member of the House Taxation Committee. “It’s like farming. You can lose money for only so long, and then it catches up with you.

“That’s where we’re at,” said Larkin, a House member since 1986. “And this doesn’t have a thing to do with the (Kansas) Supreme Court ruling on school finance — that’s a whole separate issue.”

Satisfying the court, by some estimates, is expected to cost several hundred million dollars, possibly $1 billion.

Without an increase in revenue to the state treasury, according to forecasts by the state’s budget office, the disparity will likely lead to:

• Deep cuts in social services for the disabled.
• Shortfalls in KPERS, the state’s pension accounts for its employees.
• Minimal pay raises for state employees, including Kansas University faculty and staff.
• Delays in carrying out the projects in the Department of Transportation’s Comprehensive Transportation Program, including the proposed four-lane expansion of U.S. Highway 59 between Lawrence and Ottawa.

“It’s not a very rosy picture,” said Senate President Steve Morris, R-Hugoton. “You get out two and three years from now and you’re looking at $200 million in additional KPERS and KDOT and Medicaid obligations — and these are ironclad obligations. They have to be paid.”

By July 1, 2008 — three fiscal years from now — the state’s KPERS, KDOT and Medicaid obligations are on track to exceed normal growth in state revenues, leaving little or no money for other increases.

“When you sit down and start looking at the numbers, it’s not going to take you very long to see we’re heading for a train wreck, regardless of what happens on school finance,” said Sen. Dwayne Umbarger, R-Thayer and chairman of the Senate budget committee.

“We can’t go on like this,” he said. “Something has to happen; either a tax increase, or dipping into the ending balance, or expanded gaming — something.”

Deep cuts in programs, too, are possible, Umbarger said.

To mend the ever-widening gap between revenue and basic spending would require a tax package of about $300 million, similar to one proposed last year by Gov. Kathleen Sebelius, said Rep. Jerry Henry, D-Atchison.

“Hers was aimed at school finance, but, really, that’s about how much we need to stay ahead of all this stuff: KPERS, KDOT, Medicaid,” said Henry, a member of the House budget committee.

“And even then, $300 million might not be enough,” he said. “Medicaid is going to eat us alive if it keeps going like it is, and if the economy goes stagnant on us, we’re sunk.”

Medicaid, a 40-60 mix of state and federal funds, ensures basic health care for the poor, disabled and elderly.

In this fiscal year, which began July 1, state officials expect Medicaid spending to top $1.8 billion. Annual increases of 10 to 15 percent are not unusual.So far, debate over gay marriage and the school finance lawsuit have overshadowed concern over the increases in KPERS, KDOT and Medicaid expenses.

“It’s always been difficult to have a vision here that goes beyond a year or two,” said House Minority Leader Dennis McKinney, D-Greensburg. “That’s why in 1998 when some of us talked about paying down the state’s debt while the economy was doing well, it all sort of fell on deaf ears.”

Asked how the Legislature plans on tackling both the projected shortfalls with the school finance lawsuit, McKinney replied: “That’s the question no one wants to answer; we’ve got some tough choices ahead of us.”

Several legislators said they’re ready to rein in Medicaid spending.

“The real meltdown is going to come with Medicaid,” said House Speaker Doug Mays, R-Topeka. “Medicaid is just eating us alive, and it’s only going to get worse.”