We reached the midpoint of the session last Friday, the deadline for considering all non-exempt bills in either chamber. We reconvene the House Tuesday to start considering exempt House bills and Senate bills that have come over. The week was highlighted by the signing by the Governor of our 2009 rescission bill, which provides for what we hope are sufficient cuts in the current fiscal year to end the year in the black, as required by law. With almost 5 months left in the fiscal year and with revenues continuing to fall, we tried to pass sufficient cuts to leave some cushion going into FY 2010, where we may need to trim as much as 10-12%from total state expenditures.
While the House & Senate had productive weeks, the Governor and her Secretary of Administration didn’t. The Governor’s office created a wholly unnecessary payroll and tax refund crisis last week with a belated attempt to issue debt instruments that weren’t legal. The Secretary certified on the Thursday before that state funds were insufficient to pay debts and so the Governor ordered a mere $3.5M in allotments, or cuts, in state spending to cover a single expenditure. On Monday, the Secretary and Governor sought to issue certificates of indebtedness in the amount of $225M, in addition to certificates already totaling $550M, for a whopping $775M in the current year.
Unfortunately, since it had already been determined there were insufficient funds to pay expenditures for the year, more certificates of indebtedness were not legal. After Legislative staff and Legislative leadership pointed this out to the Governor on Monday, she tried to cover by running to the press and claiming that the Legislature was holding up state employee paychecks and tax refunds by balking at her request to issue more debt. She also fired up her state e-mail account to have state employees on state time send 1000’s of hateful e-mails to legislators. All the Governor had to do was add to the $3.5M allotment from the week before to cover the amounts needed for the week. She has allotment power and had that power even before the session started in January when she knew we faced a deficit. No legislative approval is required.
House & Senate leadership quickly responded to her failure to act by expediting delivery of the rescission bill to the Governor so she could sign it and put us in a legal position to issue certificates. Why the Governor or her office failed to follow the law or make provision for the week’s payroll and tax refund liability remains the subject of much speculation. She did sign the bill, with some notable line-item vetoes, and payroll was met. Payroll was never in jeopardy but fumbling by the Governor’s office needlessly worried 1000’s of state workers.
Also last week, we discovered the Governor had authorized the sale of $14M in refinance bonds, including $10M in KPERS bonds. This was part of her plan to defer paying principal totaling $53M over the next two years by selling 3 bond issues. Incredibly, the bonds would be paid over 25 years at an interest cost of $68M! Our staff caught wind of the sale and upon discovering that part of the sale involved KPERS bond refinancing, alerted leadership to the fact that the law prohibits refinancing KPERS bonds without KPERS Committee and State Finance Council approval. Since the closing on the bonds was scheduled for next week, we were able to stop them and the Governor had to veto her own proposal in the rescission bill to refinance debt in the current year.
One of the Governor’s notable vetoes in the rescission bill was a veto of a demand transfer from the State General Fund to the Health Care Stabilization Fund. We have learned that this is apparently contrary to law as well since the transfer is not an item of appropriation subject to line –item veto. As to these legal miscues, it’s true that neither the Governor nor her Secretary of Administration are attorneys. However, she has legal counsel on staff who should be giving her sound legal advice before she acts.
Finally, another veto involved striking additional funding for the Wichita Center for Graduate Medical Education, a vital program to train doctors primarily for the medically underserved rural areas. This has left many observers scratching their heads as Governor Sebelius is said to be a prime candidate for appointment as President Obama’s Secretary of Health & Human Services. The veto would presumably give rise to some sharp questioning during the confirmation process. If the Governor fails in her bid to be selected, her actions of this past week will certainly be seen as having played a role.
Thursday, the House is scheduled to debate its comprehensive energy bill, where passage is assured thanks to broad bi-partisan support. Unfortunately, the Governor has threatened a veto even before seeing the comprehensive legislation. Prospects for a veto override are promising.