Archive for Wednesday, June 22, 2016

Brownback orders emergency actions in face of another looming revenue shortfall

In this file photo from Aug. 24, 2015, Gov. Sam Brownback, right, and his budget director Shawn Sullivan listen to school officials make a case for additional funding.

In this file photo from Aug. 24, 2015, Gov. Sam Brownback, right, and his budget director Shawn Sullivan listen to school officials make a case for additional funding.

June 22, 2016

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TOPEKA — Gov. Sam Brownback’s administration ordered several last-minute emergency financial adjustments Wednesday, including partial delayed payments to school districts this month, to prevent the state from ending this fiscal year in the red on June 30.

At the same time, Brownback and legislative leaders met as the State Finance Council to approve temporarily borrowing a record $900 million from state idle funds in order to maintain positive cash balances throughout the next fiscal year. That’s $60 million more than the state borrowed this year.

Budget Director Shawn Sullivan announced at the meeting that so far in June, revenues have not been coming in as expected, and a shortfall this month will add to the estimated $45 million budget hole caused by earlier shortfalls in April and May.

And with only eight days left in the fiscal year, he said, it is virtually impossible to make up that shortfall by ordering more spending cuts.

The measures announced Wednesday include:

• Delaying part of the final payment owed to public school districts at the end of this month, although he didn’t say how much, and rolling over that balance due to the first week of July.

• Sweeping $45 million out of a Medicaid fee fund held by the Department of Health and Environment.

• Sweeping the last remaining $16 million of general sales tax money out of the Kansas Department of Transportation’s highway fund.

• And cutting $3 million from the Department of Corrections, which he said will be able to make up the loss with increased federal funding.

“Obviously we don’t like doing any of these four things, but it’s the situation that we’re in for this fiscal year and what we have to deal with,” Sullivan said.

Even with those moves, Sullivan said, the state will end the fiscal year next week with only $5 million to $15 million in its general fund, which he said was the main reason for requesting increasing next years borrowing from idle funds to $900 million.

That form of temporary internal borrowing is officially known as a “certificate of indebtedness.” It involves moving money out of various fee funds and other agency assets into the state general fund in order to maintain a positive cash balance throughout the year.

By law, those certificates must be repaid at the end of the next fiscal year.

Previous administrations from both parties have engaged in such short-term borrowing routinely over the past 20 years. But Democrats said this year’s record-breaking amount underscores how serious the state’s cash flow problem really is.

Senate Minority Leader Anthony Hensley, of Topeka, called the cash shortfall “a self-inflicted crisis” and pressed Brownback to admit that his tax policies enacted in 2012 were a mistake and have been a failure.

“When is it we’re going to try to admit that what is happening in this state is wrong?” Hensley demanded of the governor. “We are in a downward spiral when it comes to the fiscal management of this state, and we have to correct our house.”

“Well, Sen. Hensley, I couldn’t disagree more with you,” Brownback replied.

He said the state’s current revenue shortfalls were due to weakness in what he called the “three-legged stool” of the Kansas economy: agriculture; oil and gas production; and aviation.

Senate President Susan Wagle, R-Wichita, the only member of the Finance Council to vote against issuing the certificates, said she thinks the Legislature needs to do more to cut spending.

“This isn’t the way I manage my finances. This isn’t the way I manage the finances of my business,” Wagle said. “This is to pay payroll. This is to pay utility bills. This is like me putting groceries on a charge card and praying that the money comes in.”

She added: “I feel like I’m rearranging chairs on the deck of the Titanic.”

Budget director Shawn Sullivan, however, pointed out that prior administrations have used internal borrowing even in years when the state was flush with cash. He said that’s because, on a day-to-day basis, the first quarter of a fiscal year is when the state has the highest volume of cash being paid out, but the lowest volume of revenue coming in.

Without the certificates, he estimated, the state general fund would be about $834 million overdrawn in mid-October. But later in the year, state funds would come back into balance.

In other matters, the Finance Council also approved a request by Kansas University to raise spending caps on four special fee funds that Kansas lawmakers imposed this year in retaliation for KU issuing $300 million in bonds to finance its Central District development area.

KU officials did not ask the council to remove the caps entirely, but only to raise the caps in order to meet expenses.

The funds affected include the general fee fund, which includes tuition revenue; restricted fee funds that are designated for a specific purpose; the student health care fund; and a fund that supports the Law Enforcement Training Center in Hutchinson.

Kelly Reynolds, KU’s government affairs director, noted that the Board of Regents recently approved a tuition increase for next year, but that KU would not be able to access much of that revenue without lifting the cap.

She also said KU students recently approved a fee increase to pay for additional staff at the student health center.

Comments

Vicki Smith Hale 1 year, 11 months ago

Toto, we are definitely in Kansas. Apparently the sun is only shining for Brownback who has gone off the deep end. Can we put him under a 96-hour hold for psychological evaluation? There will be nothing left of Kansas. I do think it's interesting that the cuts to Leavenworth will be made up with federal funds. If the state is accepting federal money for Leavenworth, why not accept the federal expansion of Medicaid?

Jim Austin 1 year, 11 months ago

My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub. Grover Norquist

Gary Pomeroy 1 year, 11 months ago

So again we will do everything but the rational thing and roll back the tax cuts to LLCs, etc. I thought it was not conservative financial principles to borrow in order to pay the bills . . . . Just sayin'

Tony Peterson 1 year, 11 months ago

The shell game Browncrack and Sullivan have been playing is about to explode in their faces. Unfortunately neither of them will personally be impacted by it so they won't care.

Larry Sturm 1 year, 11 months ago

When are these guys going to get their heads out of their a$$$ and do the right thing and repeal the tax cuts The oil and gas is in a slump it has been in a slump for the last 5 years according to Brownback.

Larry Sturm 1 year, 11 months ago

What is the state going to do when they can't pay the money back a year from now.

Bob Summers 1 year, 11 months ago

When are these guys going to get their heads out of their a$$$ and do the right thing and fire the useless government leeches sucking the life out of the productive people in the state.

Patrick Pritchard 1 year, 11 months ago

I am happy to suggest that If libertarians don't want to pay taxes then they should remove themselves from the list of places that the police, fire and ambulances go . They should stop driving on public streets and highways, disconnect their homes and corporations from city water and sewer lines and stop using public airports because it all costs money that they don't want to pay . In fact, don't fly period if paying for the radar controllers is beyond your dignity and stay away from hospitals and don't take Medicare on retirement because you are "obviously above all of that", that smells of government.......RIGHT ! ?

Upvote0

Dorothy Hoyt-Reed 1 year, 11 months ago

That will never happen. Libertarians are a bunch of deadbeats who want to mooch off the rest of us.

Michael Kort 1 year, 11 months ago

Senator Hensley needs to realize that what brownie is doing is not a mistake . Brownie is very purposeful !

Brownie is a "stealth libertarian" and he is doing what libertarians do with goverment and goverments funds .

To the bath tub and drown it !!!......and don't forget to empty it's pockets !!!

Libertarians don't want to be taxed, they don't want to be regulated ( because they want to run everybody else's lives to their advantage ), with their self serving propaganda, while they pick societies bones clean to amuse themselves and leave it financially bankrupted and spent. ....while pretending to be just like good old folks with descent values of hard work, honesty and social responsibility ........BS !!!

We all know that the problem is the LLC Tax Welfare Needless Handouts but we still like to refer to the so called "republicans" by misnaming them as "conservatives" when they are just plain old "self serving libertarians" in the drag disguise of being "conservative republicans" .

If you can't name it.......you probably can't fix it or perceive it in reality .

No respectable conservative would publically claim this bunch of robbers of the public treasury .

I am happy to suggest that If libertarians don't want to pay taxes then they should remove themselves from the list of places that the police, fire and ambulances go . They should stop driving on public streets and highways, disconnect their homes and corporations from city water and sewer lines and stop using public airports because it all costs money that they don't want to pay . In fact, don't fly period if paying for the radar controllers is beyond your dignity and stay away from hospitals and don't take Medicare on retirement because you are "obviously above all of that", that smells of government.......RIGHT ! ?

Michael Kort 1 year, 11 months ago

Yea, brownie has a problem because the state of Ks is on financial life support because of it's blood sucking LLCs that will.never get enough of free stuff on the public dime .

Their best recent one,, was talk about shifting the costs of electric service for businesses onto homeowners and renters by lowering the cost of electricity for businesses and raising those rates for people's homes .

Don't worry about the LLCs because if the business block pulls this one off,...... they will just move on to natural gas,..... water and sewer charges.... to further abuse the public at large, for their greedy LLC welfare benefits .

Ah, .....the public,.....that great untapped reservoir of business welfare for LLCs brought to you by the idiots who vote these people in, so that they can be taken advantage of by their so called Heroes, who are going to save them (?) from "liberal thinking" by robbing them blind at every turn ! ! !

Fred Whitehead Jr. 1 year, 11 months ago

When does the impeachment start??.......When do we act to remove this idiot governor who has trashed the state budget with his sop to the billionaires who have bankrolled his election?

When does the madness stop? Are there any citizens who give a fig about this?

Jim O'Neill 1 year, 11 months ago

I believe Dorothy and Toto have decided to go back to Oz.

Phillip Chappuie 1 year, 11 months ago

Sam Brownback has shot himself in the foot. Now he can't figure out how all the blood got on the kitchen floor. At least Wagle has recognized somebody needs to go find the mop.

Richard Heckler 1 year, 11 months ago

Susan Wagle has been a Brownback soldier from day one. She needs to be replaced.

Susan Wagle is as guilty as Sam Brownback. So is Ray Merrick.

Taxpayers need some democrats to step up and take the administration to court.

Overthrowing the government might be against the law.

Richard Heckler 1 year, 11 months ago

By the time elections come around the Brownback admin will have Kansas sold to the highest
bidder, And he may walk away with quite a nice kickback.

This $900,000,000 loan is one more step toward privatization of state services.

These RINO have no intention of paying back this $900,000,000. The lending organization needs to know this.

This is how other states have operated that are controlled by Koch machine. Koch money is standing by to make purchase OUR state services and others as well.

This entire fiasco is premeditated and calculated. This is no accident. This is the ALEC game plan. When will voters realize this is not a joke and stop allowing themselves to be jerked around.

We taxpayers need to take the state government to court.

Michael Kort 1 year, 11 months ago

Brownie is aparently having a 3 legged hallucination .

1) Boeing has moved on to elsewhere and is not coming back .

2) oil is not going back up to $100 per barrel anytime soon making hard to get out of the ground Kansas oil out to be not terribly attractive and many oil producers who borrowed money to create production when oil prices were higher than today's, are now upside down on their borrowing habits with oil priced too low to cover them .

Much of the price fluctuations in oil, are the phantom effects of options traders in oil, driving the price of oil either too high......or even down too unrealistically low,.... because the stated price of oil today, is always as oil "to be delivered" a month away, that is priced on paper, by speculators in oil options, who can disconnect from reality......high or low .

Actual, supply and demand is supposed to price oil............but.........maybe not so.......in financial reality .

3) shale bed gas is very cheep and plentiful right now and probably will stay that way until Brownie is long gone keeping the price of Ks. gas (?) down .

4) agriculture prices are not unusually high right now..........and who (?) is taxing the production of LLC Farmers in Kansas, for state income ?.......of cours state income from agriculture is down if you don't tax LLC farmers and other LLC AG. businesses ! DUHH ! ! !

Michael Kort 1 year, 11 months ago

Actually, my above post, posted by itself (?) before I had a chance to go back an correct the whatever it is (?) that turns "of course" into "of cours".

Can't say if it is in my iPad or in the interaction of it and this site ? .....but not the first auto post (?) that I have had either.

Hope you got the basic idea that we don't tax farmers who are LLCs so why is our governor depending on revenue from Ag. production for his 3 legend stool theory ?

He must know that the price of natural gas is depressed ? With no sudden reason to rise durring his remaining term ? and that save for speculators messing with the price of oil that it should be in the $50 to $60 range .

He must know if 1/2 the coal producers in this country are in bankruptcy because they over invested that the oil patch are the next potential group to go to bankruptcy because they over invested as well in production and resources, when oil was higher priced, as the coal producers did before them when coal was higher valued than now.

Perhaps the siphon jet toilet would be a better economic description of his budget ideas ? With the states budget being flushed away in a swirling vortex of LLC tax cuts ?

Richard Heckler 1 year, 11 months ago

Borrowing big bucks to cover the cost of reckless tax breaks has been around for at least 40 years in Washington D.C.

It's just that Kansas chose not to operate that way UNTIL Sam Brownback brought extreme supply side economics to the statehouse. Supply side economics has never worked because supply side economics is nothing but rhetoric = economic fiction.

DEBT 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. Over half of that amount had been created by Bush’s tax cuts for the very wealthy. Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush. Fully 81% of the national debt was created by just these three Republican Presidents at the time these facts were published.

Zebulon Haze 1 year, 11 months ago

Talk about financial responsibility . This is like buying your groceries and paying your mortgage with a credit card .And now the tax payers in Kansas are on the hook for a BILLION DOLLAR LOAN What are the tax payers of Kansas going to do when the bill doesn't get paid and they foreclose on the state ? Break Kansas up and sell it off ?

Greg Cooper 1 year, 11 months ago

e·mer·gen·cy /əˈmərjənsē/ noun noun: emergency; plural noun: emergencies

a serious, unexpected, and often dangerous situation requiring immediate action. "your quick response in an emergency could be a lifesaver" synonyms: crisis, urgent situation, extremity, exigency; More accident, disaster, catastrophe, calamity; difficulty, plight, predicament, danger

Dictionary definition above does not define the "emergency" Brownkoch describes. There was nothing unexpected in the current "situation" he has created. There is no unexpected situation that has arisen from the Brownkoch policies that have driven this state almost to its knees. However, we are experiencing what could become a "disaster, catastrophe, calamity". But not unexpected by any means. At least by those who actually face reality.

Jim O'Neill 1 year, 11 months ago

There is an old saying that "the power to tax is the power to destroy." Talk Radio has promoted the idea that smaller government and lower taxes will benefit the economy and that government is part of the problem and not part of the solution. It is said that government does not create wealth but it does consume it. The more government consumes, the less society has.

Conservative Republicans, the Tea Party and Brownback have bought these theories and for the most part, they are wrong.

Though over taxing can destroy, under taxing can destroy also. Much of what government does is valuable and it cost money to provide what it does and that means taxes. If government is too small, it cannot do its job. Providing good roads and schools is only part of what government does but they might be the most visible.

Taxes, especially to state and local governments, are mostly spent in the local and state economy. Therefore, local taxes for the most part are spent locally and do not disappear. Therefore a reasonable tax base should not adversely impact the local economy because the taxes mostly return to the local economy when spent on government services.

But government does create wealth. When it builds roads it enhances commerce. When it supports schools, it improves the skills of citizens. Laws and law enforcement allow citizens to conduct their businesses with the belief what they build will be there. I could go on and on but government needs taxes and it needs enough of them to support what it has to do.

The Tea Party, Talk Radio and conservative Republicans are wrong.

Dave Kruse 1 year, 11 months ago

Funny, you said cutting revenue will increase revenue. But again you got the same results of cutting revenue, less revenue. When will the brain dead gop base wake up from their sleep and vote you tea bags out!

Robert Moreland 1 year, 11 months ago

“Well, Sen. Hensley, I couldn’t disagree more with you,” Brownback replied.

Well Gov. Brownback; your disagreement with reality is the problem. You can pretend your disagreement is with some theoretical premise that Senator Hensley is speculating upon, but this all it is: a pretense. The actual demonstrated facts laid bare before you without question or rational dispute is that your policy of tax cuts/ trickle down economics ... is a bust.

You are only digging the hole deeper and eventually burying yourself and Kansas in it.

The government is so dysfunctional, that it houses within it a not so long term recipe for its collapse. If you can't perform the necessary duties for your state ... the essential infrastructures maintained because dwindling funds to such a degree that there is no enforcement of the laws made in Kansas ... the chief function of governance is gone.

You have already threatened the judiciary ... the schools ... the laborers and the consumers ... all institutions with a primacy for not being a failed state.

The only thing that may remain of Kansas, is city-states that take it on their own to manage their own affairs completely autonomously of the state government,; and the rest being the wild wild west.

John Williford 1 year, 11 months ago

I left Kansas a few years ago. However with such dire financial problems why has no one impeached Brownback? Why did you fools re-elect him? You scream and moan about Brownback but I read nothing about his removal from office.

Tony Peterson 1 year, 11 months ago

The way the State Constitution is written it's impossible for voters to impeach him. The process has to be started by the Legislature and then requires a special recall election limited to those who voted in the last election.

Richard Heckler 1 year, 10 months ago

BTW does the media or any investigative body know what has happened to the dollars for public education?

How did they get spent?

Who authorized the illegal spending of public education dollars over the last 6 years?

The formula was still the same and court cases have been filed which says to me those public education dollars should still be in the bank?

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