Chairman's Column - November 2014
THE STATE'S BUDGET ISSUES
The State of Kansas fiscal year begins July 1. Facing a $287 million deficit for this fiscal year with only a half year to go means cuts, probable layoffs, reduced services, and/or tax and fee increases. The number would be larger but the State can use $380 million in reserves. The projected deficit for FY 2016, which begins July 1, is another $430 million.
While most legislators, including Speaker Ray Merrick, favor balancing the budget with expenditure cuts, Senate President Susan Wagle has said that legislators need to "evaluate both the tax and spending side of the ledger to meet that obligation, once again, with Kansas families and taxpayers as our top priority."
Last session it was Wagle who prevented the House-passed bill that would allow merchants to refuse to do business with customers on religious grounds from getting through the Senate. WIBA saw the bill as an encroachment more like what we expect from Washington than from Kansas legislators. In blocking the bill President Wagle saved the Governor from a terrible predicament - anger either his House supporters or the Kansas business community and others who saw the bill as condoning discrimination.
As for the Governor, we may learn his direction in his January State of the State speech. Or he may make it a purely budget directed presentation. From a variety of sources in Topeka we may get some creative uses of "no increase in taxes" or dissertations on the difference between a tax and a fee.
State Budget Director Shawn Sullivan has said, at a meeting with WIBA members and in other venues, that the State can achieve $150 million in expense reductions through consolidations and economies.
One of the areas most likely to be looked to as a source of funds is what has come to be called the State Bank of KDOT, in reality the Kansas Department of Transportation. More than $1.5 billion has been transferred from the KDOT budget for other purposes by both parties, Democratic and Republican administrations, since 2000. This is a relatively recent phenomenon. From 1989 to 2000 Kansas protected its capital investments even in difficult budget years.
KPERS, the State employee retirement system needs an additional $50 million in the upcoming fiscal year and another $55 million in the following fiscal year. If additional funding for KPERS is not forthcoming there is a good chance for yet another downgrade to the State's bond ratings.
Hanging over the entire budget discussion is a Kansas Supreme Court decision on "funding adequacy" for K-12. The second year requires another $500 million in increased spending.
Speaker of the Kansas House Ray Merrick is in a unique position. He is expected to retire after he finishes his two year term. That means he has fewer concerns than others about how his actions might impact the 2016 elections. The first indicators of his direction will come as he makes committee appointments.
As we prepare for the January 12th start of the 2015 Legislative Session, we hope all WIBA members will reach out to their Kansas Legislators and share your thoughts on how you like the budget deficit solved.
WIBA Chairman of the Board