Interest-only payments concern Kansas lawmakers

? Kansas lawmakers are pushing for more control over state finances after the Department of Transportation arranged to pay only interest for the first decade on $400 million in recently issued bonds.

Senate President Susan Wagle said in a statement that she and her colleagues “have serious heartburn” over aspects of recent deals, The Wichita Eagle reports.

“We are pursuing legislation to ensure legislative oversight over principal and interest payments, collateral agreements and long-term leases,” said Wagle, a Wichita Republican.

Besides the interest-only payments, she also raised concerns about the Department of Administration agreeing last month to a 15-year, $19.9 million municipal lease arrangement with Bank of America to finance the construction of a power plant for state office buildings in Topeka. The deal did not go before a legislative committee for approval, and some lawmakers have voiced concern that they were not informed.

The Department of Administration said it has the power to enter into lease agreements for state business and disputed that it had not informed lawmakers throughout the process.

The Department of Transportation also defended itself. On the most recent KDOT bonds, the state will pay $184.5 million in interest through June 2025. It will then owe $498 million between July 2025 and September 2035, a figure that reflects the principal and the remaining interest.

Steve Swartz, spokesman for the agency, said in an email that this “provides relatively level debt service over our bonding portfolio through 2023” and that by “having consistent debt service, we can better plan for and manage the KDOT budget.”

Swartz said that when other bonds are taken into account, KDOT’s overall bond obligations will begin to decline in 2024.

KDOT Secretary Mike King said many states use this strategy, calling it common practice “to level your total debt load.”

Eileen Hawley, the spokeswoman for Gov. Sam Brownback, said in a statement that the Departments of Administration and Transportation acted “well within their legal scope of authority.” She said Brownback is “happy to review legislation improving legislative oversight.”