Legislative leadership OKs use of $700 million in state reserve fund

Gov. Mark Parkinson, from left, speaks with Senate President Steve Morris, R-Hugoton, House Speaker Mike O'Neal, R-Hutchinson, and Senate Majority Leader Derek Schmidt, R-Independence, before convening for the State Finance Council meeting on Monday, July 6, 2009. The council approved 00 million in certificates of indebtedness to help with cash flow problems.

? Kansas leaders have made $860 million in adjustments over the past few days, but state finances continue to teeter.

“We face some challenging times with our budget,” Gov. Mark Parkinson said Monday when the State Finance Council approved his recommendation for $700 million in certificates of indebtedness.

The action allows the state to use funds in reserve to pay for bills in July and make tax refunds and school payments that had been delayed since last month. The certificates must be repaid during the just-started fiscal year.

On Thursday, Parkinson made cuts and other adjustments worth $160 million, which included 2 percent cuts to public schools and higher education.

The sum total of the maneuvers leaves the state with a projected year-end balance of $1.1 million — a razor thin amount when talking about a $13 billion state budget.

Republican legislative leaders on the Finance Council voiced numerous concerns about the budget situation before approving the certificates.

“I don’t think any of us like doing this,” said Senate President Steve Morris, R-Hugoton.

Several members of the council asked Parkinson what would happen if state revenue continues to fall below earlier projections.

Parkinson said if the shortfalls are significant, there would probably be another round of cuts, or he would determine if there is an “appetite” for lawmakers to return for a special session to consider “revenue enhancements.”

The state usually approves certificates of indebtedness in July, partly to smooth over cash flow problems because bills are high, due to a large payment to public schools, and tax revenue coming in is low.

But the amount approved is generally in the $200 million to $400 million range. This year, however, the fiscal situation was made worse by the state’s shrinking revenue picture.