Archive for Monday, February 13, 2017

Opinion: Governor’s plan fiscally unsound

February 13, 2017

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There’s a $350 million elephant in the room, and it’s time to acknowledge it.

The state is suffering a record $350 million shortfall — and growing. I’ve received numerous visits, calls and emails from constituents asking: How did we get here?

At the end of the last legislative session, legislators left town believing we had a balanced budget. Unfortunately, there was a sharp downturn in the state’s revenue stream, oil prices decreased dramatically, and Kansas has not been able to overcome a persistent decade-long rural recession. Coupled with expensive and overreaching federal regulations, the state has had a difficult time bouncing back, which has resulted in a budget shortfall of $350 million for Fiscal Year 2017 and $580 million for FY 2018.

It wasn’t until days after the November election that we — both legislators and the public — were informed of the massive revenue shortfall. The governor chose to defer the responsibility of making difficult budget cuts to a brand new Legislature that did not gavel in until early January.

To put this in perspective, the state has experienced similar possibilities of negative ending balances nine times in its history. Every one of those times, former governors on both sides of the aisle have used his or her executive authority to make the necessary budget adjustments to ensure legislators are able to walk into session with a balanced budget, so they can focus on other policy priorities.

Because the governor chose not to use his executive authority to balance the budget, this legislative session is consumed by filling this budget hole. He presented a budget proposal to the Legislature in January that borrows $317 million and cashes out large sums — over $1 billion — of one-time money, and uses creative gimmicks to “balance the budget.”

The governor’s plan, as presented, is neither structurally sound nor fiscally conservative. Instead, it:

• Depletes the state’s assets. The governor has proposed that the Legislature authorize the securitization of the Master Settlement Agreement (MSA) from tobacco companies. Much of this money currently funds early-childhood development programs.

• Neglects to pay scheduled KPERs retirement payments in FY 2017, FY 2018 and FY 2019 to the tune of $540 million, and adds $6 billion to the state’s unfunded liability.

• Allows some Kansans to skirt income taxes. The budget proposal continues to allow certain business owners to skirt income taxes. This loophole was an unintended consequence of the 2012 tax rewrite.

• Raises tobacco and liquor tax, incentivizing Kansans to cross the state line to make these purchases, driving down taxable revenue in Kansas and shifting these tax revenues to bordering states.

While projections from the governor’s office show that his plan will produce a positive ending balance in the next few fiscal years, the state’s finances quickly begin to tank in FY 2020. Projections provided to my office by the Kansas Legislative Research Department estimate that in FY 2021 (coincidentally, shortly after his term as governor ends), the state will once again be faced with a negative ending balance — should we start paying our bills, including highway funds and KPERS payments — putting us right back where we started.

Legislators on both sides of the aisle are dedicated to composing a real, long-term structural fix to the state’s ongoing budget issues. I feel that the governor’s budget proposal falls short of this expectation. These are hard times for Kansans across the state, and there are tough decisions ahead for members of this diverse Legislature — possibly including revenue increases and significant decreased spending — to do right by the Kansans who sent us here.

The Senate has put all nonbudget-related legislative activity on hold until we concoct a structurally balanced budget that has enough votes to pass the Senate. As soon as we can do that, we’ll begin work on a new school finance formula.

I will be the first to admit that this is not an easy process, nor is it a pretty one. There’s a chance that the Legislature will debate a handful of solutions before one sticks. They call it “making sausage,” and that’s pretty ugly. Still, I remain confident that this Legislature can and will produce a stable, long-term budget solution that Kansans can be proud of.

The Kansas Senate will not kick this can down the road any longer.

— Susan Wagle, R-Wichita, is the president of the Kansas Senate.

Comments

Michael Kort 7 months, 1 week ago

SCAM ALERT !!! SAM ALERT !!!

Recently I spotted a story on KCTV5 where brownie was floating another pipe dream about rebuilding KCI in Jo Co .

I assume that this plan involved New Century Airport, the old O

Michael Kort 7 months, 1 week ago

As I was saying, the old Olathe Naval Air Station, would be the only reasonable spot, short of a brand new facility and runways somewhere ?

The cost of the I-35 off ramp and a new direct high speed roadways to new century, alone, would be a huge fortune, that he doesn't have to begin with to spend .

SO, I guess that this is like his plan to build a river that ran uphill ( with pumps ) from NE Kansas to its' western edge at a much higher elevation of height above see level than the Mo. RIver in NE Kansas........all of which evaporated suddenly after he was elected to his second term .

GONE LIKE A COOL BREEZE ON A HOT DAY IN HELL !

So why does Sam the Scam need to scam the good folks of Johnson County Ks ?s

Maybe he hopes for a third term some how ? Or has some other short term agenda that Scaming cans accomplish with the help of a hypnotized press who will publish his plans .

Greg Cooper 7 months, 1 week ago

" Allows some Kansans to skirt income taxes. The budget proposal continues to allow certain business owners to skirt income taxes. This loophole was an unintended consequence of the 2012 tax rewrite."

Ms. Wagle, there was nothing unintended about this tax bill. That the legislature was too intent on following its masters' orders doesn't make it unintended, just blind-sighted. The legislature's own research bureau, if you recall, warned of this before the bill was passed.

Take ownership of it, Ms. Wagle and legislature. That way your mea culpa might be net with a bit more trust.

Bob Summers 7 months, 1 week ago

Of course it is unsound. People with no concept how to create wealth, except to pilfer it from people that do know how to create wealth, spend too much money.

What kind of life form does this? Parasite?

Armen Kurdian 7 months, 1 week ago

At some point you just aren't managing your budget properly. I understand what the governor is trying to do, but he has not executed well.

Calvin Anders 7 months, 1 week ago

It is heartening to see Brownie loosing support for his plan to bankrupt the state, and we should all welcome voices of reason, even from such traditionally unpleasant and willfully ignorant sources. But to Greg's point, just because Ms. Wagle is behaving rationally now, does not excuse her or other Republicans in Congress from being a large part of the cause of this looming financial crisis. Her appeal to sanity would carry more weight if she were willing to acknowledge her part in creating the mess.

Carol Bowen 7 months, 1 week ago

"Coupled with expensive and overreaching federal regulations, the state has had a difficult time bouncing back, which has resulted in a budget shortfall of $350 million for Fiscal Year 2017 and $580 million for FY 2018."

I had hopes that Susan Wagle was rational, but blaming the federal government for the state's budget problems is the typical scapegoating we have been hearing. I have a hard time thinking of any new federal fegulations that have affected the state of Kansas since governor Brownbacck took office. The legislature is discussing budget, now, the way they should have been years ago. Senator Wagle needs to accept responsibility for the senate not considering all the parameters before making radical changes to the budget. Neither the house nor the senate did the math. They were operating on philosophy and attitude. This is what their constituents hear. Now, I suspect that Wagle is worried about her next election or the GOPs control of the legislature or both.

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