A KU student leaves Strong Hall on the Kansas University campus on Tuesday and passes a reflection in a stone sculpture pedestal. The Kansas Board of Regents is considering a plan that would allow universities to keep state sales taxes collected on their campuses as a way to raise scholarship funds.

A graph from the Budget Director's Overview Presentation indicating the state's difficulties.

Topeka ? Facing a growing fiscal crisis, Gov. Kathleen Sebelius on Tuesday unveiled a state budget that would slash funding for higher education and local governments, while keeping public school funding flat.

Sebelius’ budget director, Duane Goossen, said the proposed cuts were painful but represented “realistic solutions” to bridging a budget gap that could reach nearly $1 billion.

Sebelius’ plan also would lead to an undetermined number of state employee layoffs, shutting down some agencies, stopping the phase-out of tax cuts, increasing waiting lists for services for people with disabilities, and closing some correctional facilities.

In perhaps an illustration of the desperate fiscal situation, Sebelius, a Democrat, proposed a 1 percent pay raise for state workers, but put the onus on state agencies to come up with funds for the increase.

Higher education hit

Higher education would see a cut of $120 million over the current fiscal year and next one, which starts July 1.

Kansas Board of Regents Chairwoman Donna Shank of Liberal said school officials have planned for the first fiscal year cuts and understand the realities of the state budget problem and nationwide recession.

But Shank added “a $120 million hit would profoundly stunt the progress the system has made toward meeting the state’s work force and economic development needs.”

The governor’s budget does provide bonding authority to complete the proposed $50 million funding for expansion of the Kansas University School of Pharmacy.

Republicans critical

Sebelius’ budget adjustments for the current and next fiscal year total $944.4 million.

Republicans were quick to tee off on the spending blueprint as hearings were planned for today before the legislative budget committees.

Sebelius’ proposal to take an estimated $106 million in revenues headed for local governments and divert that money to the state’s coffers will force local tax increases, according to House Speaker Mike O’Neal, R-Hutchinson.

“I can’t fathom how the governor can say that her budget plan won’t increase taxes,” O’Neal said.

GOP leaders also pounced on Sebelius’ need to rely on some $56.7 million in gambling revenues from casinos that haven’t been built.

And House Appropriations Committee Chairman Kevin Yoder, R-Overland Park, noted the plan has no room for error by leaving almost no money in reserve.

Some Republicans favor an across-the-board budget cut, but Sebelius’ budget director Goossen said that would prove harmful to public schools and services for vulnerable Kansans.

The Kansas Chamber said Sebelius’ plan to stop the phase-out of several business taxes represented a tax increase.

“We ask the governor to reconsider asking Kansas businesses to pay additional taxes and shoulder the deficit created by years of government overspending,” said Amy Blankenbiller, president and chief executive officer of the Kansas Chamber.

Local schools

For public schools, Sebelius’ proposal represented a “hold steady” plan after several years of significant increases that were brought about by a school finance lawsuit, said Lawrence school Superintendent Randy Weseman. Sebelius’ plan to freeze the level of public school funding would essentially negate an approximately $165 million increase for the next year that had been approved earlier.

“What you have to understand is that the governor’s budget proposal is just that — it’s a proposal,” Weseman said. “There’ll be a debate in the Legislature, and there are some in the Legislature that would like to see deeper cuts for public education and some that would like to kind of hold the line and hold harmless all public finances for public education.”