Topeka ? Legislators finished a $12.5 billion budget before ending their annual session Wednesday, but some of them don’t think the state can sustain the spending, even for another two years.

The last piece of the budget for the fiscal year beginning July 1 was a $308 million bill with money for dozens of projects and programs, approved 68-56 by the House and 23-15 by the Senate two hours later. Those votes sent the measure to Gov. Kathleen Sebelius, who will sign it but has the power to veto individual items.

The budget increases aid to public schools, provides $50 million to help fix crumbling higher education buildings, boosts spending on social services and gives pay raises and bonuses to state employees. It allows the state to expand its prison system and even contains money to keep the Kansas Sports Hall of Fame from closing.

But some of the spending will be financed from the state’s cash reserves, the money the treasury keeps on hand as a cushion against bad economic times. Those reserves are expected to top $844 million by July 1, but a year later, according to projections, they would drop by more than 60 percent to less than $318 million.

The same forecast, by legislators’ research staff, projected the state will face a budget shortfall when lawmakers convene in 2009. The most persistent warnings came from conservative Republicans like Sen. Tim Huelskamp, who called the projections “stunning.”

“Eventually, you have to pay for what you spend,” said Huelskamp, R-Fowler, who voted against the last spending bill. “We’re looking at these huge red figures in ’09 and ’10 and on out, unless we pass a major tax increase.”

Some optimism

But legislators have seen similar projections before – including last year, when lawmakers committed to big increases in aid to schools – only to have a healthy economy supply sufficient revenue. Also, the projections don’t include any revenues from four casinos and slot machines at dog and horse tracks authorized this year.

Sebelius was more optimistic about the future during a post-adjournment news conference. She noted the state’s unemployment rate in March was 4.3 percent, the lowest for that month since 2001, before the terrorist attacks that deepened an economic slump.

“The economy continues to grow by leaps and bounds,” she said. “What we’re trying to do is balance tax cuts, which I think can continue to grow business opportunities; educating the work force, which we know is directly tied to keeping good jobs in this economy; and keeping revenue flowing in.”

The legislative session, which began Jan. 8, ended on its 90th day, the exact number scheduled by leaders. Lawmakers plan to return May 22 for a brief adjournment ceremony.

Less than 1% increase

The budget would increase the state’s total spending by $111 million during the next fiscal year, or about 0.9 percent. However, there are shifts in spending to aid for schools, higher education and social services and away from highway projects, where spending fluctuates from year to year.

Conservatives honed in on how the state plans to spend its general tax revenues, about $6.1 billion worth in the next fiscal year. And spending financed by those dollars would increase $456 million, or more than 8 percent.

“Many budget priorities are misplaced despite our best efforts,” said Rep. Jeff Colyer, R-Overland Park, explaining his “no” vote and speaking for other conservatives. “This guarantees an unprecedented budget crisis.”

But part of that increase was fueled by a dispute between federal and state officials over how the state distributed aid under the Medicaid program, which covers medical services for the needy. The federal government accused Kansas of drawing down too much in federal funds in past years, and the two sides reached a $90 million settlement.

Also, the budget sets aside $123 million for schools that was promised last year but won’t be spent until fiscal year 2009.

“I think we can afford this budget,” said Rep. Bill Feuerborn, D-Garnett, one of his chamber’s budget negotiators.

Key budget items

The year’s final spending bill approved Wednesday by legislators includes:

¢ $90 million to ratify a settlement between the state and federal officials over how the state spent money under the Medicaid program, which provides medical services to the needy. Federal officials accused the state of drawing down too much money in the past; the settlement avoids larger penalties.

¢ A $29.9 million increase in state aid for school districts, to reflect higher-than-anticipated enrollments.

¢ A requirement that the Kansas University Medical Center and the Kansas University Hospital, separate entities sharing a Kansas City campus, sign a new operating agreement before the medical center can affiliate with the St. Luke’s Hospital system in Kansas City, Mo.

¢ $26 million in federal funds for the second phase in modernizing the Department of Labor computer system handling unemployment benefits.

¢ An additional $25.1 million to provide home-based services for Kansans with developmental disabilities and shorten the waiting list for those services.

¢ $18 million for disaster relief to help western Kansas recover from winter storms. Once the state makes the commitment, the federal government will provide an additional $153 million.

¢ $9 million in bonds to allow the Adjutant General’s Department to build a regional center in Salina for training National Guard troops and emergency first responders.

¢ An additional $7 million for community mental health centers.

¢ $4.5 million for grants to community corrections programs, to help them prevent offenders from being removed and sent to prison for violating conditions placed on them.

¢ Thirty-five new jobs at the state Racing and Gaming Commission, to deal with a reopened Camptown Greyhound Park in Frontenac, and to regulate new casinos authorized under a new law. Cost is $4.4 million.

¢ A 4 percent increase in state aid for community colleges, costing $3.8 million.

¢ An extra $3.8 million to increase reimbursement rates for groups providing home-based services to the disabled and addiction treatment and to centers providing intermediate care to the developmentally disabled.

¢ An additional $3 million for community groups providing services to the developmentally disabled.

¢ $3 million to expand a state program providing educational services for pre-kindergarten-aged, at-risk children.

¢ $2.7 million to remodel an existing building at Osawatomie State Hospital, so that an additional 30-bed unit can open there in 2009.

¢ $2.7 million for two water projects, the dredging of Horton’s municipal lake and the Low Head Dam project in Washington County.

¢ $2.5 million for exterior work on the Landon State Office Building, near the Statehouse.

¢ $2.25 million for the National Institute for Aviation Research at Wichita State University, bringing the total new dollars to $4.75 million.

¢ $2 million to allow communities’ primary health care clinics to expand and offer dental services.

¢ $1.6 million for a new “Fusion Center,” a multi-agency team analyzing information for homeland security purposes.

¢ $1.1 million to cover expenses associated with the state’s lawsuits against Colorado over the Arkansas River and against Nebraska over the Republican River.

¢ $950,500 for operations and development of the new Kaw River State Park in northwest Topeka, on the former Menninger psychiatric clinic campus.

¢ An additional $511,976 to help the state deal with a backlog in processing applications for its health insurance program for working-class families. The backlog was caused by a federal requirement that no benefits go to illegal immigrants; some legal Kansas residents have trouble supplying the proper documentation.

¢ $500,000 to fund the second year of a program under which veteran teachers mentor 1,000 teachers new to the profession.

¢ An extra $400,000 for a new program to help prevent tobacco sales for minors, the Senate’s proposal. House members had sought twice as much.

¢ Two additional researchers and two new bill drafters for the Legislature, plus upgrading one secretary position to a bill drafter’s job. Cost is $271,274.

¢ $250,000 in lottery dollars to the Kansas Sports Hall of Fame, in Wichita, if it can raise the same amount of private dollars.

¢ $250,000 for college scholarships for veterans who served in a combat zone after Sept. 11, 2001.

¢ $250,000 to expand the Parents as Teachers program under the Department of Education to an additional 595 students.

¢ Four additional hotel and motel inspectors for the Department of Health and Environment, at a cost of $246,616.

¢ A new program providing grants to technical schools for new equipment and internship programs, at a cost of $180,500.

¢ $100,000 to allow KDHE to conduct background checks for participants in mentoring programs.

¢ One new health facility surveyor for the Department on Aging. The projected cost is $85,224.

¢ An additional $60,000 for the Kansas Bureau of Investigation for analyzing DNA samples.

¢ A provision requiring the Department of Health and Environment to collect more information about late-term abortions of viable fetuses and report on what it collects.

¢ A provision adding three members to a commission that oversees the ongoing renovation of the Statehouse and requiring it to meet at least once every three months.