Problem with Government's Finances Likely to Hurt Legislators, Governor (by the Associated Press)

A relatively stable economy has masked a significant problem with state government's finances. The prob­lem is likely to catch up with legislators and Gov. Kathleen Sebelius before she leaves office in January 2011. The state expects to spend more money than it will collect in general revenues during the current fiscal year, which began July 1. It's already on course to do the same during the next fiscal year.  Sebelius and legislators have committed to higher spending on public schools in recent years, and costs keep rising in Medicaid, which covers medical services for the needy. Not only have legislators avoided tax in­creases, they've made targeted tax cuts to help keep the economy moving.  

They've been able to mix new commitments in spending with selected tax breaks because revenues are flowing into the state treasury at a healthy enough rate. But if and more likely, when revenue growth slows, state officials will be struggling with pro­jected budget shortfalls.  Some agencies will feel a pinch next year when Sebelius and legislators draft a budget for the 2009 fiscal year. They're likely to tighten up on spending in some areas to keep the promises they've made in recent years.

 "It makes for a tight budget," said Senate President Steve Morris, a Hugoton Republi­can. "We just have to depend on the economy to keep us going."  Each fall, as the weather cools and the football season progresses, the· executive branch works-on-spending proposals for leg­islators to consider after the new year begins. Each November brings a financial forecast that tells governors and legislators what the state should collect and spend.  The state has experienced regular boom ­and bust cycles in recent decades, so even one term governors have enjoyed good finan­cial times and wrestled with bad ones. Gov. Bill Graves entered office in January 1995 promising to bring stability to government.

The late 1990s brought large tax cuts, but Graves left office in January 2003 having pushed through higher taxes to prevent bud­get cuts.  Since then, the state has faced financial  issues that easily could have forced taxes higher again. They included a projected bud­get shortfall exceeding $800 million in 2003 and court mandates to provide more money to public schools.  Sebelius, a Democrat, even proposed two tax increases in 2004, for schools at the beginning of the year and for health care at the end. The Republican controlled Legislature took neither seriously.  But she and legislators closed the 2003 budget gap by restructuring the state's ongoing transportation program, cutting off aid to local governments and some creative finan­cial maneuvers.   As for school funding, she's simply gambled that revenue growth will cover the new spending, and legislators went along. The state promised to phase in $831 million in increases in aid over four years, ending with the 2008-09 school year.   Revenue growth also allowed the state to keep its existing Medicaid program intact, despite higher costs that mirror the inflation in health care generally.  

Budget Director Duane Goossen expects those costs to grow 8 percent or 9 percent a year into the near future. One Budget Division projection puts the additional costs at $60 million for the next fiscal year.  And roughly two thirds of the state's $6 billion in general revenue is committed to public schools and the Medicaid program.  "Because these things are growing pretty fast, the rest of the budget is going to have be watched pretty carefully," Goossen said.  What's telling is a financial profile con­tained among the first few pages of the Bud­get Division's report summarizing the bud­get for the current fiscal year. It projects that spending outside public schools, higher edu­cation and Medicaid won't grow in fiscal 2009, remaining at less than $1.4 billion.  That profile also shows that the state can sustain its spending by eating up its cash reserves, which have bulged in recent years because of revenue growth.  

With cash reserves exceeding $900 mil­lion on June 30, the state has some leeway. But it expects to burn up $532 million in reserves during the current fiscal year. The Budget Division projects the state burning through another $252 million in fiscal year 2009.  The state is acting like a family that, through some good economic fortune, man­ages to stash $10,000 in a savings account over a few years. Then that family dips into savings to cover monthly spending, and after two years the savings account balance has dropped to less than $1,500.  Of course, unexpected financial wind­falls, such as unanticipated overtime or a relative's gift, can keep that family from draining its savings for a while.  

The same is true with the state. Economic activity could continue to provide unantici­pated tax revenues for the state, allowing it to sustain its spending a while longer.,   But, as with that  family, it's not hard to understand why the state can't keep it up indefi­nitely.

PAT ROBERTS: GOVERNMENT MUST BE MORE BIPARTISAN

The following is an edited text of a speech given Thursday by Sen. Pat Roberts, R-Kan., to inaugurate the Docking Lecture Series at Southwestern College in Winfield:

Throughout American history, great governmental achievements, those markers of a great civilization laid down for future generations, have required nonpartisan and selfless effort -- effort based on principle without regard to partisan political gain.

Certainly the Declaration of Independence, the Emancipation Proclamation, women's suffrage, the Civil Rights Act, Social Security, Medicare and the GI Bill of Rights are examples of how national leaders put the good of our country above themselves and above their political aspirations of power in seeking the greater good. They allowed, even encouraged, their parties to flow together, to work in harmony for a better America.

This political unity of the nation's leaders resulted in unity among our citizens. Unity results in progress; polarization and balkanization result in chaos.

I regret to say the goal, and even the means, of achieving unity seems to be lacking today.

Too many times, partisan one-upmanship on both sides of the aisle trumps the respect and balance necessary for true problem solving and progress. But while the finger-pointing from both the right and the left has grabbed the headlines, the good news is there are those whose strong goal is to see a return of a greater bipartisanship.

Recently, Rep. Dennis Moore, D-Lenexa, and I spoke at a forum in Overland Park about bipartisanship in Washington. We had just left D.C. after a bitter debate over Iraq and troop levels. We had a packed house at the forum, because people were curious whether these two perspectives from two opposite sides of the aisle would be at odds and full of gloom and doom over the state of political affairs in this country.

I can tell you, there was more agreement than disagreement between us during the 90-minute conversation. Both of us could cite many examples throughout our careers where we had come together from outside the party structure to make a difference for Kansas.

And this wasn't a new thing. My godfather in this business, former Sen. Frank Carlson, taught me something that I remember every day: "There are no self-made men or women in politics, it's your friends who make you what you are."

Carlson, who was the only Kansan to serve as a House member, a senator and a governor, was a friend to everyone he met. And even in the toughest legislative battles, I never heard him use a harsh word, never heard him speak unkindly about anyone.

Following Carlson, I had the privilege of working for former Rep. Keith Sebelius, Gov. Kathleen Sebelius' father-in-law. He taught me that kindness, respect and tolerance were far more powerful tools for legislative change than insults, attacks or bitterness.

Bob Dole, Nancy Kassebaum, George Docking, Bob Docking -- all successful Kansas elected officials -- have understood that agreeing to disagree on one issue did not mean they could not find common ground in other areas.

Without question, I think the American people are demanding the return of a more cooperative, nonpartisan spirit in Congress.

Yes, there are legitimate differences between the two parties. But there are also many points of agreement, and the continued success of American government of, for and by the people is paramount. We must work together for this grand experiment to not merely survive but to succeed.