Tuesday, December 9, 2014

Brownback announces cuts to close budget gap

By Andy Marso 
KHI News Service

TOPEKA, KAN. — Gov. Sam Brownback announced Tuesday he will use his power of allotments to make fee sweeps and spending cuts to close a $280 million budget gap in the current fiscal year.

Brownback said in a prepared statement that the allotments come from recommendations made by Budget Director Shawn Sullivan.

“I appreciate Shawn’s hard work in identifying efficiencies and cost savings across state government,” Brownback said. “These first steps are a down payment in resolving the immediate budget issue. I look forward to presenting a full budget proposal and policy recommendations to the Legislature in January. Our job now is to address this situation through good fiscal governance while maintaining our investment in education, sustaining funding for public safety and allowing T-WORKS to be completed.”

Spending on Medicaid — the state's largest health-related item — was not affected.

But the governor announced cuts to operating budgets for state agencies that administer programs for the disabled, poor and sick, as well as enforce environmental regulations.

He also proposed saving $5.4 million by delaying the expansion of the Meyer Building at Larned State Hospital, the state's largest psychiatric facility.

The cuts and sweeps Brownback proposed are intended to get the the state only through July 1, 2015. Another $436 million budget gap looms in the fiscal year that begins on that date, and Brownback and lawmakers will have to find a way to close that gap when the Legislature reconvenes in January.

The state has not cut spending enough to keep pace with revenue reductions caused by income tax cuts Brownback spearheaded that have wiped out reserve funds.

The bulk of the budget fix Brownback announced Tuesday — $201 million of the $280 million — comes from transfers from fee funds. The governor's memo denoted that those transfers are "subject to legislation," meaning the Legislature will have a say on whether to allow them.

The biggest proposed transfers come from the state highway fund ($96 million) and Kansas Department of Health and Environment fee funds ($55 million). But the governor also proposed sweeps of everything currently in the Kansas Endowment for Youth ($14.5 million) and the Children's Initiative Fund ($500,000) — money from litigation against tobacco companies that is intended for evidence-based early childhood education programs.

"Just a few months ago, Governor Brownback vetoed a transfer of $5 million from the KEY Fund, saying that fund was established specifically for early childhood programs and should remain available for such purposes in the future," said Christie Appelhanz, vice president for public affairs at the Topeka nonprofit Kansas Action for Children. "We’re deeply distressed by the governor’s change of heart. The current budget crisis is of his own making, and it shouldn’t be paid for by our state’s youngest and most vulnerable children.”

The Children's Initiative Fund receives money each year from the tobacco settlement, though the amount is expected to decline soon. The Kansas Endowment for Youth was intended to provide funding for the CIF programs after the tobacco money dries up.

The governor also proposed reducing employer contributions to the state pension system by almost $41 million, a move that does not require legislative approval. The Kansas Public Employees Retirement System recently emerged from a critically underfunded status in part because the Legislature agreed to increase state contributions to improve the system's health.

The rest of the $78.5 million in cuts outlined in the governor's plan come largely from a 4 percent across-the-board reduction in Cabinet agency operating budgets, which is also not subject to legislative approval. The Department for Children and Families, at almost $4 million, will receive the largest cut in raw dollars.

Annie McKay, executive director for the Kansas Center for Economic Growth, a Topeka-based think tank, said the cuts come on top of reductions made a few years earlier when Kansas was in the grips of the global recession.

"The governor's plan is the latest sign of how unprecedented and unaffordable tax cuts are eroding key investments that make up the economic foundation of our state and continue to put Kansas' future in jeopardy," McKay said. "We've been down this road before and it's a dead end."