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Archive for Wednesday, January 11, 2006

Sebelius budget has extras but won’t fit with schools audit

January 11, 2006

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— Gov. Kathleen Sebelius proposed a budget Tuesday with something for all parts of state government, but it won't work if legislators shoehorn in a big school funding plan without additional revenues.

The $11.7 billion spending plan to finance state government after July 1 assumes no major problem with education funding because Sebelius didn't attempt to anticipate details of a legislative audit. That document, released Monday, said the state needs at least an extra $400 million to meet a Kansas Supreme Court mandate for legislators to adequately fund public schools.

The lack of a big school finance plan cast doubt on the Democratic governor's proposals. House Appropriations Committee Chairman Melvin Neufeld even suggested Sebelius was trying to push lawmakers into raising taxes to benefit schools - something Republicans, who control the Legislature, generally oppose.

"It's pretty clear the Legislature probably won't leave without actually putting new money in education above what the current law is," said Neufeld, R-Ingalls.

Top aides said Sebelius drafted a budget designed to keep state government financially sound while addressing concerns about education, health care and public safety.

"This budget covers the ongoing activities and key things of state government," State Budget Director Duane Goossen said.

While the state would end fiscal 2007 with $396 million in cash reserves - meeting a target set by Kansas law - spending commitments from previous years would force the state to cannibalize $178 million of that to meet the budget in fiscal 2008.

Absent new revenues from higher taxes, expanded gambling or some other source, grafting a school finance plan onto Sebelius' proposed budget would create future budget problems, even if lawmakers phased in a spending increase.

"We've got to find new revenue," said Senate Ways and Means Chairman Dwayne Umbarger, R-Thayer, adding that he prefers gambling because, "I don't see a tax increase happening this year."

Sebelius aides said the timing of the legislative audit prevented the governor from addressing it. They said she would follow the same approach she took last year on school finance - not proposing a plan but waiting for ideas to emerge from the Legislature.

"We're dealing with the facts we had at hand," Sebelius spokeswoman Nicole Corcoran said.

Under Sebelius' budget, overall state spending would decline about 1.1 percent, or about $131 million. That's largely because of the timing of highway projects, which causes the Department of Transportation's budget to fluctuate year-to-year.

Taxes provide about 45 percent of the dollars for state government. Spending from those sources would total $5.3 billion in fiscal 2007, an increase of $143 million, or 2.8 percent.

Sebelius proposed giving most state workers a 2.5 percent pay raise and setting aside dollars to improve public safety.

However, Carl Hill, chief of staff for the Kansas Association of Public Employees, said the union is disappointed Sebelius didn't include additional wage provisions in her budget.

She even included nearly $76 million in new dollars for public schools to fulfill mandates approved by legislators last year in responding to Kansas Supreme Court orders to improve education funding.

But Republicans were frustrated that Sebelius doesn't intend to submit a school finance plan of her own.

"She's supposed to be the leader of the state of Kansas, and obviously, she doesn't want the job well enough to actually lead," said Rep. Brenda Landwehr, R-Wichita, an Appropriations Committee member.

Aides said Sebelius will work with legislative leaders on a plan with bipartisan support.

"This is still pretty early in the conversation," Corcoran said.

Sebelius also could face criticism from conservatives who don't want large spending increases and worry that pressure is building for a tax increase. The Washington-based Tax Foundation released a report last week saying Kansas' taxes already are high enough to discourage economic development.

Chris Atkins, a foundation attorney, said that instead of building its reserves, the state ought to repeal its corporate franchise tax, which firms pay for the privilege of doing business in Kansas, to save companies $46 million a year. Of eight other states in the region, only Missouri, Nebraska and Oklahoma have a similar tax. Some legislators have introduced a bill to eliminate the tax.

Sebelius also has proposed eliminating the tax on new business machinery and equipment, something Atkins said he endorsed.

"The long-term goal has to be to make Kansas competitive, the most competitive state in the region, in terms of its tax climate," Atkins said.

The governor proposed $36 million in new spending on higher education, including $20 million more for university operations.

But her budget doesn't address a Board of Regents proposal to raise sales and property taxes to raise $70 million in fiscal 2007 for repairing campus buildings. Her staff said she hadn't discussed the proposal with the regents.

Among her social services initiatives is a $13.7 million increase in spending on in-home services for the disabled.

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