OTTAWA HERALD: Governor suggests three options to balance the budget

By Doug Carder
April 23, 2016

Gov. Sam Brownback on Wednesday proposed three options for balancing the budget after consensus revenue estimates for the remainder of Fiscal Year 2016 and for FY 2017 were adjusted downward by nearly $230 million.

Consensus Revenue Estimating Group lowered estimated revenues for the remainder of FY 2016 by $93.9 million and adjusted downward estimated revenues for FY 2017 by $134.7 million.

The governor’s proposal, presented Wednesday by Budget Director Shawn Sullivan, did not include raising income or business taxes.

“I am prepared to take executive action to help reduce expenditures, however, the Legislature has a Constitutional obligation to balance the budget and we are hopeful they will work with us on one of the three options Director Sullivan presented today.” Brownback said Wednesday in a news release. “After carefully reviewing the final CRE numbers, I do not believe it would be useful to have a debate about raising taxes on small businesses or anyone else. Instead, we will focus our support and attention on controlling government spending more efficiently.”

In the first option, the governor would use his special allotment authority to reduce most of the remaining sales tax going into the State Highway Fund, transferring $70 million to the State General Fund in FY 2016 and $115 million in FY 2017, according to a news release from the governor’s office. The governor also would carry forward into FY 2017 the 3 percent reduction made to universities in FY 2016.

Also included in the first option is the securitization of future tobacco settlement payments in excess of $42 million for an estimated one-time infusion of approximately $158 million in Fiscal Year 2017. The securitization requires legislative approval. The Children’s Initiative Fund programs would continue to receive funding at their current appropriation level of $42 million per year, according to the release.

The governor’s proposed securitization of future tobacco settlement payments has drawn sharp criticism from Kansas Action for Children. Shannon Cotsoradis, president and chief executive of the organization, issued a statement addressing the governor’s proposal:

“I question whether Gov. Brownback’s proposal to securitize via proviso is legal,” Cotsoradis said. “The statute very clearly states that all funds from the Master Settlement Agreement must be deposited into the Kansas Endowment for Youth Fund. Why would we permanently destroy our state’s thriving legacy for early childhood education in exchange for a temporary, one-time budget fix that does nothing to solve the problem? Kansas babies and toddlers didn’t create this budget crisis, and they shouldn’t be forced to pay for it.”

In the second option, in addition to transferring sales tax from the State Highway Fund, the governor — with legislative approval through a budget proviso — would delay the FY 2016 fourth quarter KPERS payment and delay its repayment until FY 2018, according to the release. Through special allotment authority from the state Legislature, the governor also would find an additional $25 million in targeted efficiency savings, according to the release.

The governor’s third option also includes the transfer of sales tax from the State Highway Fund through the governor’s special allotment authority. The Legislature would pass a budget with expenditure reductions of 3 percent to 5 percent for most state agencies, for FY 2017, according to the proposal.

The governor’s three options did not address the underlying problem — a lack of revenue, Democrat House Minority Leader Tom Burroughs said.

“These short-term ‘fixes’ create a larger long-term problem,” Burroughs said in a prepared statement. “Kansans are going to be paying for the mistakes of the Brownback Administration for years to come. The only question is how much it will cost.”

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