Gov. Sam Brownback has known for months that the state budget was shockingly out of balance. He also knew he had authority to order budget cuts and bring spending in line with revenues. His failure to act has allowed red ink to balloon to $350 million this year, plus another $580 million in the fiscal year that begins July 1.
The governor’s latest financial ploys unveiled this week include an astounding mishmash of desperate maneuvers. Two of these stand out in pushing the state deeper into unprecedented debt.
First, the governor proposes to borrow $530 million from private investors and in return hand over to them for 30 years the proceeds from the tobacco settlement of 1999. This drastic maneuver would blow up the Children’s Initiatives Trust Fund and wipe out revenues dedicated to early childhood education.
Second, the governor proposes to borrow another $317 million from the pooled money investment fund and have Kansas taxpayers pay back this loan over seven years. When Kansas State Sen. Carolyn McGinn, newly appointed chair of the Senate Ways and Means Committee, saw this scheme, she aptly observed: “It looks to me like we’re taking a pay day loan. We are borrowing against ourselves … it’s just going to put us further away from where we need to get to.”
The governor wants to force state legislators into a corner with one-time fixes — layering more long-term borrowing on top of the mountain of debt he has already amassed. Adding new debt to the existing Brownback-era debt burden would be the height of financial mismanagement.
An unvarnished look at our state’s current debt load should give legislators pause:
Under Brownback tax-supported debt has already swollen to an all-time high of $4.7 billion, a 50 percent jump in just two years. Kansas led the nation in boosting its borrowing, according to Moody’s, a respected national credit rating agency, and has now joined the top third of state borrowers that include mostly debt-happy East Coast states. By comparison, states surrounding Kansas all fall into the bottom one-fifth in debt per capita and as a percent of personal income.
This dramatic growth is due to the ill-advised issuance of record levels of pension and highway debt. Under Brownback Kansas has issued $850 million in new highway debt, but none of those funds have gone to improve roads. That amount and more were swept from the highway fund to pay for a reckless tax experiment. In its first year proceeds from the new $1 billion pension debt have fallen short of paying interest on those bonds and have not diminished the state’s $9 billion pension liability.
This debt load coupled with unsustainable state finances has resulted in multiple credit downgrades for the state as a whole and for a number of state agencies engaged in borrowing.
Paying off these debts now takes priority over vital core services — public schools, state colleges and universities, public safety, and aid to vulnerable citizens — and will continue as the top priority every year to come into midcentury, if not longer.
My message to Republican legislators: Shed the toxic Brownback brand of unbalanced budgets, unfair taxes and historic debt. Slam the door on the governor’s one-time fixes. Repair state finances and balance the budget without more debt. Or face the music and start slashing away at state spending.
— H. Edward Flentje is professor emeritus at Wichita State University.