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Archive for Wednesday, June 21, 2006

Sebelius thwarted in finance council

June 21, 2006

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— Previously routine approval of a budget tool became a big tussle Tuesday between Gov. Kathleen Sebelius, a Democrat, and Republican House leaders.

The Republican House leaders won, thwarting a proposal to allow the state to use cash balances in its various funds to smooth out cash flow problems in its all-purpose general fund.

The inability to use what is called a "certificate of indebtedness" could delay monthly state payments to schools as early as November, according to figures put together by Sebelius' budget office.

Sebelius said she was frustrated by the move led by House Speaker Doug Mays, R-Topeka, and House budget committee chairman Melvin Neufeld, R-Ingalls.

"Having a cash flow that allows us to pay our bills is essential," she said.

Senate Republicans sided with Sebelius.

But the House Republicans said the growing economy and accompanying increases in state revenues would be more than enough to cover the state's bills.

For eight straight years, state leaders have approved a certificate of indebtedness so state government can use balances in other state funds for cash-flow purposes to make payments.

On Tuesday, the State Finance Council, which is chaired by Sebelius and includes House and Senate leaders, was asked to approve the certificate of indebtedness in preparation for the next fiscal year, which starts July 1.

But Neufeld said the state's ending balance for the current fiscal year of $1.5 billion and increases in state revenues were more than enough to take care of cash-flow concerns.

"It's premature to do this at this point," Neufeld said. "It sends a bad message to the people of the state of Kansas."

But Sebelius and her budget director Duane Goossen said even if the state didn't need to use the certificate, it should have the tool available.

"There is no financial advantage to us not to do this," Goossen said, adding that many states use similar accounting maneuvers when monthly expenditures surpass revenue.

Sebelius said it gave the state cash-flow flexibility. If it's not used, "we will have forfeited nothing."

But a motion to issue a $300 million certificate of indebtedness, which was down from the $450 million approved each of the past three years, failed.

The motion required seven votes and only received six.

Voting for it were Sebelius; Senate President Steve Morris, R-Hugoton; Senate Majority Leader Derek Schmidt, R-Independence; Duane Umbarger, R-Thayer; Senate Democratic Leader Anthony Hensley of Topeka, chairman of the Senate budget committee; and House Democratic Leader Dennis McKinney of Greensburg.

Voting against were Mays, Neufeld and House Republican Leader Clay Aurand, Courtland.

Neufeld and Mays said if the need arose to require the certificate, the council could meet again and approve it. Meanwhile, they said the Legislature should work on alternative budget tools to help cash flow.

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