Lucky breaks with federal funds, pensions help Kansas budget
Topeka Kansas Gov. Sam Brownback's latest efforts to prevent a state budget deficit were assisted by a well-timed decision on health care funding from federal officials and better-than-expected news about teacher pensions.
The Republican governor's administration outlined $63 million in budget adjustments last week. The changes capture savings from lower-than-anticipated spending, book favorable revisions in cost estimates, shift fee dollars into the state's main bank account and tap additional federal dollars.
Brownback told The Associated Press that he sought to bolster the budget in ways that Kansas residents wouldn't much notice. However, he's facing some skepticism from a leading advocate of children's programs and supporters of highway projects.
A look at the changes imposed by Brownback in the $15.4 billion budget for the fiscal year that began last month.
Lawmakers expected cuts
The GOP-dominated Legislature counted on Brownback trimming $50 million as part of a larger plan to keep the budget balanced through June 2016, and they were pleased by his moves last week. The plan also included sales and cigarette tax increases that took effect last month.
The state's budget problems arose after Republican legislators slashed personal income taxes at Brownback's urging in an effort to stimulate the economy. GOP lawmakers preserved past cuts in income tax rates and most of an income tax exemption granted in 2012 to 281,000 business owners and 53,000 farmers.
Rescued by Obamacare?
The biggest change to the budget is tied an additional $18 million in federal funds to cover health care for children in working class families. The state is using the federal dollars to cut its own spending.
"The timing of this was pretty fortunate in that we were notified in the last couple of days of June," Sullivan told reporters during a Statehouse news conference.
The increase in federal funding was authorized by the 2010 federal law overhauling health care championed by President Barack Obama, though Congress provided the dollars only this year. Brownback and other Republicans are strong critics of what they call "Obamacare," and GOP conservatives have increased their political power in Kansas by running against the Democratic president.
"It's ironic," said Senate Minority Leader Anthony Hensley, a Topeka Democrat, adding that Brownback has "spent the past five years blaming President Obama for everything."
Advocacy group upset
The advocacy group Kansas Action for Children was skeptical that health coverage for children won't be affected by using the extra federal dollars to reduce the state's spending.
But the group has other concerns about funding for children's programs, much of it financed with funds from states' legal settlements with tobacco companies in the 1990s. Such spending peaked at $77 million during the state's 2008 fiscal year and has declined since.
Brownback and legislators have regularly shifted unspent tobacco settlement dollars into the state's main bank account to help with budget problems. The latest such move is the shifting of $2.8 million in fund previously set aside but unspent for a program aimed at improving children's reading skills.
"It is clear Kansas children and families continue to foot the bill for an unsustainable tax plan," Shannon Cotsoradis, the group's president and CEO said in a statement.
Teacher pension costs
Brownback's budget changes capture more than $9 million in funds state agencies didn't spent during the last fiscal year, which normally would carry over into the new fiscal year.
Sullivan said the bulk of it — more than $7 million — is coming from the state Department of Education. He said state officials overestimated the cost of payments to the Kansas Public Employees Retirement System to cover teachers' pensions during the previous fiscal year.
"That money wasn't spent," he said.
In tough budget times, governors and legislators have so regularly diverted funds earmarked for highway projects that they've referred to the state Department of Transportation as "the Bank of KDOT." The current budget already diverted $132 million from highway projects.
To that, Brownback is adding $8 million in savings from operations within the agency.
Sullivan told reporters that no highway projects would be affected. Transportation Secretary Mike King said the agency found efficiencies — and a mild winter reduced its need for salting and sanding roads.
But Economic Lifelines, a group that advocates for comprehensive state transportation programs, responded with a statement that said, "Enough is enough."
"The continuation of these transfers expedites the deterioration of Kansas roads," co-chairman Johnnie Koger said.