By Bryan Lowry
November 25, 2016
Gov. Sam Brownback’s plan to wait until January to fix the state’s $349 million budget deficit runs counter to what governors have done over most of the past three decades.
The three governors who preceded Brownback used their executive authority to make cuts before the Legislature convened when the state faced financial difficulties. And until this year, Brownback had done the same multiple times.
Brownback’s decision to wait this year has rankled lawmakers of both parties, who say that will exacerbate the problem.
But the governor’s office says Brownback “intends to submit a budget proposal in January that makes significant cuts unnecessary.”
“It is interesting that legislators who campaigned on protecting core functions of government from spending cuts are now criticizing the Governor for refusing to cut K-12, higher education, social services, and public safety,” said Brownback spokeswoman Melika Willoughby.
That stance lends support to some lawmakers’ view that the governor will opt for a one-time solution like selling off the state’s future proceeds from a tobacco settlement or delaying or reducing payments to the state’s pension fund.
Brownback’s office has previously weighed selling off a portion of that settlement on the bond market, a process known as securitization, to get cash in the short term.
The idea prompted backlash from lawmakers and children’s advocates in the last session. The money from the tobacco settlement is currently used to fund programs that provide healthcare, literacy education and a variety of other services for low-income children, according to Annie McKay, president and CEO of Kansas Action for Children, an advocacy group.
“I’m sure the governor’s going to bring that back,” said Sen. Jim Denning, R-Overland Park, the vice chairman of the Senate budget committee.
Brownback needs legislative approval to sell off the tobacco proceeds.
“He’s got a one-time money, short-term fix that he wants the legislators to agree to,” said Denning, who plans to stand for Senate majority leader. “And the longer he waits the easier that becomes because the fuse will be so short to touching the explosive that everybody’s going to be under lots of pressure to look at a one-time solution.”
He said the Republican caucus “is no longer going to be willing to look at a one-time Band-Aid without a long-term solution bolted on the back end of it.”
Senate President Susan Wagle, R-Wichita, sent an e-mail to Republican senators Friday morning asking the caucus to join her “in calling on the Governor to lead and use this opportunity to implement necessary cuts this fiscal year.” The e-mail was obtained by The Eagle.
McKay called using the tobacco settlement a “desperate, panicked move” that would permanently decimate “a system that supports Kansas’ youngest and most vulnerable citizens” for a one-time fix.
Power to make cuts
The governor doesn’t have to wait for the Legislature. He has the power to make across-the-board cuts if the state is on pace to end the fiscal year with less than $100 million in its general fund. He has the power to make more targeted cuts if the state is on pace to have an ending balance of less than zero, which it currently is.
Brownback has used this power multiple times during his governorship.
Only once in the past 30 years has a Kansas governor deferred to the Legislature on a shortfall announced before the start of the session, according to a memo from the state’s nonpartisan Legislative Research Department.
The state faced a $12.9 million shortfall ahead of the 1987 legislative session. Democratic Gov. John Carlin, who was leaving office, did not make cuts during his final months in office. The Legislature passed a 3.8 percent budget cut during the first week of its session and newly elected Republican Gov. Mike Hayden immediately signed it into law during his first month in office.
Every other time the state has faced a budget shortfall, the governor has taken action ahead of the session.
“It’s unprecedented and highly irresponsible for the governor to just basically punt,” said Senate Minority Leader Anthony Hensley, D-Topeka, the Legislature’s longest-serving member. “Or maybe I should describe it as an onside kick because he is deferring to the Legislature.”
The memo also shows that Brownback has faced shortfalls more frequently than his predecessors. Denning, who has reviewed the memo, noted that all of the other times the state faced a shortfall took place during a recession.
1983: Democratic Gov. John Carlin cut state agency spending by 4 percent, or $51 million, ahead of the legislative session.
2002: Republican Gov. Bill Graves cut most state services by 1 percent several months before the legislative session to shore up cash reserves when the state was projected to end the fiscal year with less than $100 million in its general fund.
2003: Graves made $118 million in cuts ahead of the legislative session.
2009: Democratic Gov. Kathleen Sebelius cut education funding by $7.1 million and eliminated the state’s transfer to the Health Care Stabilization Fund ahead of the session.
2010: Democratic Gov. Mark Parkinson made two rounds of budget cuts totaling $243.6 million when the state was in the midst of the recession.
2011: Brownback used his executive authority to cut the budget by $7.2 million in April of his first year as governor, while the Legislature was in session.
2015: Brownback cut $110.9 million in spending in the face of a budget shortfall. The Legislature passed additional budget reductions and raised taxes to plug a budget hole for the following year.
2016: Brownback made multiple rounds of budget cuts totaling $152.4 million ahead of the 2016 session. He also used his executive authority to sweep $70 million from the Kansas Department of Transportation and delay a $95.1 million payment to the state’s pension fund in May. He ended making an additional $23.6 million in budget cuts in June.
2017: Brownback announced in May 2016 that he would sweep $115 million from KDOT for the 2017 fiscal year. He also reduced spending by $97 million, including cuts to the state’s universities and Medicaid system, through his executive authority.
That brings the state to the current $349 million projected shortfall announced in November. Brownback’s office has said he does not plan to make cuts prior to the 2017 legislative session and has pointed to lawmakers’ calls for more financial oversight as part of the governor’s rationale.
“Given all of the discussion around the state budget over the last several months and the legislature’s desire to be more involved, the Governor believes it is most appropriate to give them an opportunity to exercise their Constitutional power of the purse,” Willoughby said in a statement.
Lawmakers of both parties say that waiting to address the shortfall will make it more difficult to solve the state’s fiscal problems in the long term. After lawmakers close the budget gap for this fiscal year, they face a projected $583 million shortfall for the fiscal year that begins in July.
There is also the question of how the Kansas Supreme Court will rule on school finance. The budget gap could double or triple if the court orders the state to put more money toward K-12 education.
“It would take a lot of burden off the Legislature if the governor would do his job,” said Sen. Laura Kelly, D-Topeka, the ranking Democrat on the Senate budget committee.
“I think he’s hoping to get a call to Washington and be able to wash his hands of the mess that he’s created here,” Kelly said in reference to speculation that Brownback may be tapped for a role in President-elect Donald Trump’s administration.
Brownback has refused to answer questions about whether he might join the administration.
Brownback’s office has pointed to national economic factors, such as dropping oil and agriculture prices, as the cause of the state’s fiscal problems, but many lawmakers point to tax cuts enacted during his first term as the primary reason for the state’s budget woes.
Many moderate Republicans and Democrats who ousted incumbents in the recent election campaigned on tax fairness and a promise to fix the state’s finances. Taxes could go toward a solution for next fiscal year, but they can’t be applied retroactively to this year’s shortfall.
Republican leaders say budget cuts should happen sooner rather than later to fix the current deficit.
The “longer agencies are forced to wait for budget certainty, the greater the impact and the more disruptive budget adjustments are,” Wagle said in her e-mail. “Our schools, agencies and employees manage their daily tasks more effectively with budget stability and predictability.”
Rebecca Proctor, the executive director of the Kansas Organization of State Employees, said the union receives daily inquiries from state workers who are worried that the state will have to have layoffs or furloughs.
Willoughby said in an e-mail that Brownback’s budget, to be unveiled in January, will make furloughs and layoffs unnecessary.
However, Proctor said state workers will remain on edge until they receive more specific information from the governor’s office and many will seek work outside the state’s civil service.
Denning said the impact of the cuts will be increased the longer the state waits to make them, since they will be applied over a shorter time period in the fiscal year.
“The pain that these cuts will cause will be twice as severe because we only have half the time to react to them,” he said.