Well, as legislative sessions go, this one will be of added significance to me and of huge importance to the State. Last Monday I was sworn in as the new Speaker of the Kansas House of Representatives. I take the position during the worst economic times Kansas has faced in decades. After watching the Governor propose spending far in excess of our revenues each year and watching the legislature respond by allowing expenditures to outstrip revenues to the point that we went from a $935M surplus just a few years ago to a projected $1+B deficit in the next fiscal year, we must now pull together and approach budget decisions in a fundamentally different way and right the ship of state.
We were headed down a path toward a deficit the past 4 years, but the historic collapse on Wall Street last Fall was the proverbial straw that broke our back. Every state in the nation has been affected; Kansas to a lesser extent, but still, the situation in Kansas is such that we now have a projected deficit in the current fiscal year of nearly $200M. We must act to fill that hole first, before tackling an upcoming fiscal year deficit that hovers around $1B.
The Governor has been aware of the looming deficit for months but decided to take no action to address the deficit by using powers delegated to her by the Legislature to make targeted cuts in the current year’s budget and/or issue an Executive Order making across-the-board cuts to guarantee a positive ending balance in the current fiscal year. Instead, she proposed issuance of additional certificates of indebtedness. We did not see and weren’t briefed on her budget proposals until last Tuesday, the day after her State-of-the-State speech, during which she gave no specifics on her plan to balance the State’s budget.
What she has proposed is woefully inadequate to address our current budget problems. Over 50% or $100M of the Governor’s current FY adjustments are done with one-time funding sources, which include sweeping (i.e., taking) special revenue funds that are earmarked for other purposes, issuing “stop payments” on State obligations, and suspending payments to local units of government.
Faced with a current year deficit of nearly $200M, she reduces expenditures by a mere $55.8M and still grows government spending by $247M or 4% over last year’s spending. Additional government employees increase by over 334 positions from the previous year. Her FY 2010 budget, which covers the year beginning July 1, 2009, has a structural budget imbalance of $57.7M, where expenditures exceed revenues by that amount. Expenditures would still exceed last year’s numbers by $52M. She bases her budget on Nov. revenue estimates but December numbers show a further reduction in revenues of some $44.6M. Her projected ending balance for FY 2010 of only $600,000 is already under water, based on these new figures.
Notwithstanding the collapse of the casino industry nationally and in Kansas, the Governor plugs in $56.7M in anticipated casino license revenue in FY 2010 and then diverts the revenue from what we directed it to be used for. Any revenue from casinos was to be used for debt reduction, infrastructure and/or property tax relief. She would use it to pay for expenditures in excess of revenues. Given the state of the State’s budget this year, the Governor’s proposed budget does not comply with the 7 1/2% ending balance law. Her statutory 7 1/2% ending balance law budget would require across-the-board cuts of 14.4%.
Needless to say, the legislature’s work from here on out will be devoted to truly balancing the State’s budget and ending the year with a positive balance in the State’s checkbook, as required by the State Constitution. With the state and nation in a recession, don’t look for any tax increases as this would only fuel and prolong the recession. What is needed is an approach that gets government spending under control and cuts that get us back in the black with a minimum of disruption in essential governmental services.