Kansas cut taxes to stimulate economy, now in record debt

The Associated Press

Gov. Sam Brownback and legislative leaders on Wednesday authorized a record $900 million in temporary borrowing to cover the state’s expenses through June 2017.

The State Finance Council, which is led by the Republican governor, voted 8-1 to loan the state’s main bank account the money from other, idle funds.

The move, known as a certificate of indebtedness, is one the state has used repeatedly to cover bills when cash is expected to run low. It’s similar to when a family borrows from a savings account or college fund to cover monthly bills because its checking account is temporarily short of funds between paychecks.

The only dissenting vote Wednesday was from Senate President Susan Wagle, R-Wichita, who believes the state is in a recession.

“This isn’t the way I manage my finances. This isn’t the way I manage the finances of my business. This is like me putting groceries on a charge card and praying that the money comes in,” Wagle said. “And now we’re being asked to cover our operation expenses on a certificate of debt and it’s not going stop unless you increase taxes or cut spending.”

The vote came after Budget Director Shawn Sullivan told the council the state is considering sweeping as much as $16 million from the Kansas Department of Transportation and up to $45 million from a Medicaid fee fund to balance the budget for the current fiscal year, which ends June 30. An additional $3 million can be taken from the Kansas Department of Corrections and it is possible the state would delay part of its June payments to school districts until July, Sullivan said.

The state is likely to have between $5 million and $15 million in the general fund to begin the next fiscal year, he said.

The council’s action and Sullivan’s disclosures came a day before legislators convened a special session on school funding. The state Supreme Court ruled last month that the education finance system remains unfair to poor school districts and GOP lawmakers are working on a $38 million plan to comply.

Kansas has struggled to balance its budget since Republican legislators slashed personal income taxes at Brownback’s urging in 2012 and 2013 in an effort to stimulate the economy. While even some GOP lawmakers have acknowledged that the tax cuts didn’t work as anticipated, the governor and his top aides blames the state’s ongoing fiscal problems on regional slumps in agriculture, energy production and aircraft manufacturing. The state’s tax collections have fallen short of expectations 10 of the past 12 months.

Senate Minority Leader Anthony Hensley, D-Topeka, criticized Brownback for refusing to reverse the tax cuts to respond to the financial problems.

“When is it we’re going to admit that what is happening in this state is wrong? We are in a downward spiral when it comes to the fiscal management of this state and we have to correct our house. We’ve got to get our fiscal affairs in order at some point,” Hensley said.

Brownback, who stressed his evangelical Christian beliefs in running for governor, is the most unpopular one in the nation, with only a 26 percent approval rating and a 65 percent disapproval rating.