State officials say thanks, but no thanks, to bankruptcy

? A bipartisan, national group of state elected leaders, including Kansas Senate President Steve Morris, on Monday asked Congress to back off any proposal that would allow states to file for bankruptcy. In fact, they said even making such a proposal can cause fiscal problems.

“Allowing states to declare bankruptcy is not an authority any state leader has asked for nor would they likely use,” said the letter signed by the leaders of the National Governors Association and National Conference of State Legislatures.

The NGA is headed by Washington Gov. Christine Gregoire, a Democrat, and vice chair Nebraska Gov. Dave Heineman, a Republican. The NCSL is headed by state Sen. Richard Moore, a Democrat from Massachusetts, and president-elect Morris, a Republican from Hugoton.

The letter was directed to Republican and Democratic leaders in the U.S. House and Senate.

In recent weeks, several high profile Republican organizations and politicians, including former House Speaker Newt Gingrich, have touted a proposal to allow states that are facing huge revenue shortfalls to seek bankruptcy protection in federal court to restructure their fiscal problems. But some opponents see the proposal as a way to force state workers to take cuts in pay and pensions.

But the NGA and NCSL leaders said bankruptcy for states wasn’t necessary. The states have been resolving their budget problems through the recession by making tough political choices and will continue to do so, they said.

“While a number of states continue to face budget deficits over the next few years, we will continue to use our sovereign authority to balance our budgets and meet our obligations,” they said.

Kansas has gone through six rounds of budget cuts and a 1-cent increase in the states sales tax and still faces an estimated $500 million revenue shortfall in the next fiscal year.

The state leaders also said even the discussion of legislation allowing states to declare bankruptcy can create unnecessary volatility in state and local bond markets.