Kansas governor wants to tap road, pension funds, make cuts to close current budget shortfall

Government And Institutions Associated Press

With Kansas facing a projected $279 million budget shortfall after enacting aggressive tax cuts, Republican Gov. Sam Brownback proposed Tuesday to trim spending and divert funds for highway projects and public pensions to general government programs.

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The plan, which applies only to the current budget year, avoids reducing aid to the state's public schools, its Medicaid health care program for the needy, prison operations or state universities. Budget Director Shawn Sullivan outlined the details in interviews and said the administration believes agencies that do face cuts can find efficiencies to avoid hurting any programs.

"These first steps are a down payment in resolving the immediate budget issue," Brownback said in a statement, adding that his administration is addressing the shortfall with "good fiscal governance" while protecting education and public safety.

The plan drew immediate criticism because it would divert $41 million from the pension system for teachers and government workers. Obligations to retirees over the next two decades are only 60 percent funded, and that figure was expected to climb over time thanks to a 2012 law that increased both the state's and employees' contributions to stabilize the system's long-term health.

In his successful re-election campaign, Brownback pointed repeatedly to the pension fixes — which promised full funding of its obligations in 2033 — as a major accomplishment.

"It reneges on the commitment that was made," Senate Minority Leader Anthony Hensley, a Topeka Democrat, said Tuesday.

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The governor has the authority to order budget and pension-funding cuts to avoid a shortfall for the current fiscal year, which began in July. Major state departments, save the Department of Education, will face a 4 percent cut in spending for January through June, including the Legislature.

But some parts of the plan — such as diverting $96 million in highway funds — require legislative approval.

Brownback has not yet tackled an additional $436 million shortfall in the budget for the next fiscal year, nor has he proposed backtracking on the aggressive personal income tax cuts enacted at his urging in 2012 and 2013.

In a move meant to boost the economy, Kansas dropped its top personal income tax rate by 26 percent and exempted the owners of 191,000 businesses from income taxes altogether. Future rate reductions also are promised, embodying a long-term goal to eliminate state income taxes over time.

Some GOP state senators already are floating tax proposals, such as delaying future cuts or reinstating income taxes for the wealthiest business owners. Brownback hasn't publicly ruled out those ideas, but House Speaker Ray Merrick, a Stilwell Republican, has said he wants to consider spending cuts first.

Besides diverting nearly $96 million in funds set aside for highway projects, the plan announced Tuesday would trim nearly $8 million more from the Department of Transportation's operating budget. The shortfalls are projected for the state's main bank account, and highway projects are financed outside that account.

KDOT immediately said that it still would expect to finish the projects promised under a 10-year, $8 billion transportation program launched in 2010 because existing projects have cost less than expected. Also, the cut in its operating budget won't lead to layoffs, the agency said.

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Online:

Budget director's summary of plan: http://1.usa.gov/1ugN7xf

Kansas Legislature: http://www.kslegislature.org

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .