Kansas Public Employee Retirement System (KPERS)

TOPEKA ? Kansas legislators worry about resorting to the kind of funding moves with public employees’ pensions that previously clouded the retirement system’s long-term financial health as they wrestle with the state’s serious budget woes.

But lawmakers weren’t sure Wednesday whether the state can afford the full, annual contributions to teachers’ and government workers’ benefits as spelled out in a 2012 state law designed to bolster the Kansas Public Employees Retirement System. House and Senate committees working on budget legislation have so far made conflicting decisions.

Republican Gov. Sam Brownback proposed freezing the state’s pension annual contributions at the 2016 level to help erase projected budget shortfalls that totaling more than $1 billion for three years, through June 2019. The proposal is part of a larger budget-balancing package that would allow the state to preserve past personal income tax cuts that he has championed.

The Senate Ways and Means Committee this week voted to add a total of $330 million for increased pension contributions to its proposed budgets for the fiscal year beginning in July and the one beginning in July 2018. The House Appropriations Committee voted Wednesday to postpone a decision on larger contributions until later this spring.

Shawn Sullivan, Brownback’s budget director, said that if legislators reject Brownback’s plan to temporarily freezing pension contributions, they’ll have to consider larger tax increases than they might otherwise pursue.

“It was a necessary evil within our budget,” Sullivan said.

But critics of the Brownback’s proposals contend that they move the state away from the pension-system reforms enacted five years ago. The governor has touted those reforms as a key accomplishment of his administration.

While state officials see no immediate danger to retirees’ benefits, some lawmakers worry that continuing to short pension contributions would push the system — and the state’s finances — toward a crisis.

“It’s going to blow up on us,” said veteran state Rep. Henry Helgerson, a Wichita Democrat.

Brownback’s proposals would freeze the state’s annual contributions to the pension system at roughly $300 million a year.

If the state does what the 2012 law requires, it would provide an additional $136 million in the fiscal year beginning July 1 and an additional $194 million for the following fiscal year. The state then would be spending close to what financial projections say is needed to keep up with promised benefits into the future. The law would demand additional increases in future years.

Legislators are feeling pressure to keep the commitments on pensions because the state had a decades-long history of shorting its contributions to meet other budget obligations, creating a long-term shortfall in funding for promised benefits.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said the state has become “notorious about reneging on those kinds of promises.”

The long-term pension funding gap stood at $8.5 billion at the end of 2015, the latest calculation available from the pension system. The 2012 law ramped up the state’s contributions and increased paycheck deductions from teachers and government workers to close that gap by 2033.

The governor’s proposals this year assume closing the pension funding shortfall would take 10 years longer, until 2043.

Proposals to roll back past income tax cuts to balance the budget have bipartisan support, but Brownback wants to raise tobacco and liquor taxes and annual business filing fees instead.

Legislators last month passed a bill to raise $1 billion in new revenue over two years with higher income taxes, but the governor vetoed it. The lack of a new tax plan has hindered their budget work.

“We have no tax plan on the horizon,” state Rep. Erin Davis, an Olathe Republican, said during the House committee’s discussion. She later added, “It’s going to be very difficult for us to move forward when we don’t have any money to do so.”