Topeka In a preview of what’s to come, Kansas leaders Tuesday wrestled over the budget deficit before agreeing to borrow funds to fulfill the state’s obligation to public schools.
Gov. Kathleen Sebelius, a Democrat, rejected a proposal from House Speaker Melvin Neufeld, R-Ingalls, to institute an across-the-board cut of state government as a way to start addressing a $140 million revenue shortfall, which could balloon to $1 billion.
But Republican legislative leaders refused to go along with Sebelius’ bid to issue $400 million in what are called certificates of indebtedness.
In the end, the State Finance Council, which is composed of Sebelius and key lawmakers, approved $250 million in certificates of indebtedness, which will allow internal government loans of idle reserves that must be paid back within the fiscal year. Earlier in the year, the council approved $300 million in certificates.
The new certificates are needed to provide the state’s 297 school districts with their full $220 million December payment. The state shorted schools $55 million because of cash-flow problems.
Neufeld said his proposed 2.8 percent across-the-board cut was needed to start the process of whittling down the budget in the face of what could be a record deficit. That would have been on top of previous budget cuts ordered by Sebelius.
“There’s going to be pain,” Neufeld said, but added that it was better to spread the cuts over two fiscal years starting immediately.
Sebelius rejected the idea, saying that across-the-board cuts are unfair to services that are crucial for some Kansans. “They are dangerous for a lot of vulnerable citizens,” she said.
When she sought approval of the $400 million to handle the state’s cash-flow problems, Republicans pushed back, saying they would like to see specific budget cuts from Sebelius before borrowing funds.
“Borrowing from ourselves strikes me as a defeatist approach,” said Senate Majority Leader Derek Schmidt, R-Independence.
But Sebelius said the budget and the cash-flow problems were separate and shouldn’t be linked.
She vowed that she would provide lawmakers a budget proposal that is balanced when the legislative session starts Jan. 12.
“You will have a balanced budget,” which will include a revised budget for the current fiscal year, and a plan for the next one that starts July 1, she said.
A vote to approve $400 million in certificates of indebtedness failed, as did a Republican-offered vote for $200 million. The council then agreed to $250 million, which means schools will get paid but the cash-flow problem will erupt again in mid-February, said Sebelius’ budget director Duane Goossen.
During the meeting, some Republicans expressed displeasure with Sebelius’ work on the current budget problems. Sebelius ordered agencies to prepare budget cuts, but she said she wanted to hold harmless public schools and social services, which total two-thirds of the budget.
House Majority Leader Ray Merrick, R-Stilwell, said one-third of state government was sustaining the entire budget hit. “I don’t think that’s fair,” he said.
Later, Sebelius said school funding needed to be maintained in the current fiscal year because teachers were already under contract. She said in the next fiscal year “we’ll make some adjustments,” but she didn’t elaborate.