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Archive for Thursday, June 19, 2014

Finance Council approves borrowing $675 million; contentious debate ensues over state’s fiscal policies

June 19, 2014

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— Gov. Sam Brownback and legislative leaders on Thursday approved borrowing $675 million from idle funds to shore up the state general fund over the next fiscal year, setting off a sharp political debate over the direction of the state's fiscal condition and economy.

That amount is more than double the $300 million in "certificates of indebtedness" the state issued for the current fiscal year, which ends June 30. And it is closer to the record $775 million borrowed in fiscal year 2009 during the Kathleen Sebelius administration, just after the beginning of the Great Recession.

Rep. Paul Davis, D-Lawrence, who is challenging Brownback for re-election this year, said the increase in borrowing represents a "deteriorating fiscal situation" for the state.

"When we have a projected ending balance (next year) of $56 million, when we have had revenue declines over the past few months of $310 million, and what unfortunately nobody is talking about here is what the future of our fiscal situation looks like," Davis said.

As the House Minority Leader, Davis serves on the State Finance Council that authorized the borrowing. That's a group that includes the governor and other legislative leaders who are authorized to make financial decisions for the state when the Legislature is not in session.

But Brownback stuck to his position of blaming the Obama administration for raising capital gains taxes early in 2013, prompting investors to sell off assets before that tax hike took effect, resulting in lower capital gains revenues for states a year later.

"What we got last year (when revenues exceeded projections) was we got the bump off the fiscal cliff, that President Obama raised taxes and people moved their money a year earlier," Brownback said. "We're in a far better situation today. We've got a record number of people working in the state of Kansas. ... And if we hadn't cut taxes, particularly for small business to create jobs and opportunities, we wouldn't be in near as good a situation as we are."

Davis, however, countered that the impact of changes in federal tax law affected all states that have income taxes. But while other states saw an average 7 percent drop in income tax collections in recent months, Kansas had a 22 percent drop. He said that was the result of the large income tax cuts that Brownback and the Republican-controlled Legislature approved in 2012.

But Brownback defended those tax cuts.

"We cut taxes to create growth," he said. "We always told you that there would be a dip in revenues for a couple of years before it pulled back up, but the focus was always getting more money in people's pockets.

Senate President Susan Wagle, R-Wichita, said she doesn't think most Kansans are concerned about the state having less money to spend.

"Government has less money to spend, but that's what people are asking for," she said. "They want more money in their pockets."

Senate Democratic Leader Anthony Hensley, of Topeka, argued that the reason the state's financial condition improved soon after Brownback took office was because the previous Legislature, and Democratic Gov. Mark Parkinson, approved a 1-cent sales tax increase for three years.

But Brownback shot back: "If you're proposing raising taxes again, that's up to you and Rep. Davis. You can choose to propose that if you choose to propose that. I don't think it's a wise route to go."

Thursday's action marks the 16th consecutive year that the finance council has authorized certificates of indebtedness. The borrowing is intended to make sure the state has an adequate balance on a day-to-day basis to meet cash-flow needs because revenues flowing into the state tend to come in irregular intervals.

By law, the certificates have to be paid back before the end of the fiscal year in which the money is borrowed.

Comments

Larry Sturm 2 months, 2 weeks ago

Brownback tax cuts are digging the state in deeper and deeper and Obama had nothing to do with ii.BROWNBACK AND THE REPUBLICAN CONGRESS ARE BAD FOR KANSAS.

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Richard Heckler 2 months, 2 weeks ago

Borrow Borrow Borrow Spend Spend Spend, Borrow Borrow Borrow Spend Spend Spend , Borrow Borrow Borrow Spend Spend Spend , Borrow Borrow Borrow Spend Spend Spend

This is Supply Side Economics straight out of Washington D.C. Some call it Reaganomics. Then again some call it wreckanomics.

Cut taxes recklessly then borrow to cover the losses is not a good investment. Downright stupid.

This is what reckless and irresponsible conservatives do.

An old school FISCAL CONSERVATIVE would neither cut taxes recklessly nor borrow to pay for the losses. A mammoth money hole indeed.

How did this Supply Side Economics nonsense work out?

In the end big debt to support super duper tax cuts and such HAVE BEEN the results which does not seem to bother Republicans, as long as they are in power.

In fact, by the time the second Bush left office, the national debt had grown to $12.1 trillion:

This GOP ENTITLEMENT - Over half of that amount had been created by Bush’s tax cuts for the very wealthy.

This GOP ENTITLEMENT - Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush.

This GOP ENTITLEMENT - Fully 81% of the national debt was created by three Republican Presidents. http://www.dollarsandsense.org/archives/2010/0111orr.html

Now we see where ALEC and Brownback are taking Kansas ... A mammoth money hole indeed.

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MerriAnnie Smith 2 months, 1 week ago

And their voters don't care. It's like a football game to them. Who cares how many bones get broken as long as the Home Team wins. Who cares if the game is played fairly and in a way where everyone benefits. As long as the Home Team wins.

Republican voters in Kansas don't want to hear the truth about the debt and spending. They've been given the talking points: It's Democrats who spend. If too much was or is being spent, it's the Democrats who did it/or are doing it. History is not to be learned. Too much danger in it polluting the minds of voters.

So, along comes Brownback and the Kochs, and they use that ignorance to the maximum in order to lower the Koch's taxes (and the Brownback's taxes at the same time), with no regard whatsoever for what it does to the school system and the services and the taxes of the middle class. They've got that middle class eating right out of their hands and asking for more.

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Richard Heckler 2 months, 2 weeks ago

This "money shortfall" is calculated,orchestrated and part of the ALEC agenda. This short fall is not some mistake in accounting this is on the level of high crime I say. Other ALEC governors are pulling off the identical scheme and some are finding themselves in a bit of trouble.

http://www.salon.com/2014/06/19/scandals_heat_up_for_scott_walker_and_chris_christie/?source=newsletter

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Philipp Wannemaker 2 months, 2 weeks ago

If the tax cuts worked so well, and lots of new jobs were created, why does the state need to borrow $675 million to pay their bills?

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Dorothy Hoyt-Reed 2 months, 2 weeks ago

The only thing that's happened is that some businesses have moved from Kansas City, MO to Kansas City, KS. The Kansas employees don't have to drive as far, but the Missouri employees have to commute further. No gain on jobs. And the one business that is booming, wind energy, they want to destroy. They could care less about jobs.

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James Nelson 2 months, 2 weeks ago

It is time for the political leadership of our state to start showing some fiscal responsibility before every dime of reserve funds of every type are completely depleted. Can Brownback ever admit to a mistake with his 'experiment'? The state cannot handle his gaffs any longer.

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Elizabeth Newman 2 months, 2 weeks ago

The only idle funds I can think of are off-shore bank accounts for the wealthy who have ripped off the working class. What are these idle funds...is it of the type where the Federal reserve pushes a button and walla?

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William Weissbeck 2 months, 1 week ago

Susan Wagle's light bulb has burned out. I'm giving her credit that she at one time had one. Borrowing has to be repaid. If revenues under the current taxing structure never increase, then we can't repay, and have to cut more spending. It's HER legislature that passed the current spending, so if it's too much - it's the GOP's fault! If her ultimate goal is to not fund our public schools or public universities, then yes, government spends too much. But hey, do we really need paved roads across most of Kansas? Buffalo, Native Americans and the cowboys didn't need no paved roads.

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Patricia Davis 2 months, 1 week ago

If a Democrat had done this the howls would be heard all the way to Colby.

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Greg Cooper 2 months, 1 week ago

In a way, the Democrats ARE responsible. By not activating their voter base, by allowing the voters to remain uneducated about issues, and by allowing the Koch-backed PACs and "think tanks" to dictate policy to the bought-and-paid-for neo-Republicans, they have in part a large burden to bear.

Oh, yeah, and, if you had read all the comments these threads, rather than just the ones you know you'll agree with,you might have noticed that there is a large "liberal" outcry over this issue. The difference is that we of that train of thought actually address reality rather than some great experiment.

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Claudean McKellips 2 months, 1 week ago

We need a new Governor and a new Legislature fast! Responsible leadership before Brownback drives us deeper into a ditch http://davisforkansas.com/

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Larry Sturm 2 months, 1 week ago

You can lie about figures only so long the chickens are coming home to roost or the well is getting deeper.

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Fred Whitehead Jr. 2 months, 1 week ago

The governor and his cronies are responsible for this shortfall. Their tax cuts to their pals the Koch Regime have created this problem. And now the Koch Regime, in one of the most offensive act I have seen are running TV ads telling us how beneficial this facist organization is.

Go figure.

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