States across the nation facing budget woes similar to Kansas are busy selling or leasing state-owned assets – everything from airports and toll roads to parks and golf courses – to generate revenue.

Might that be a solution for Kansas?

Rep. Kevin Yoder, the Overland Park Republican who was appointed to chair the House Appropriations Committee, said he believes the sale or lease of state-owned assets “should be on the table” as budget-makers contemplate how to close the state’s pending budget gap.

But he cautioned that the budget hole that Kansas faces is so large that he was unaware of any state-owned assets that might yield sufficient revenue if leased or sold to make much of a dent.

Forecasters say Kansas faces a budget shortfall of $141 million in the current fiscal year. That shortfall will deepen to more than $1.02 billion after the next fiscal year unless steps are taken.

“There have been conversations about the sale of assets, and that should be on the table, but realistically, the hole is so big there’s not going to be one avenue to resolve it at this point,” Yoder said. “There would probably be more interest (in asset sales or leases) if the hole was smaller.”

One of the state’s largest assets sometimes held up as a possible item to lease or sell – the Kansas Turnpike – might not generate much revenue, if any at all, if transferred to private hands.

The Kansas Department of Transportation, in a report on its long-range needs and possible funding mechanisms to meet those needs, said the creation of additional toll roads, or the sale or lease of the turnpike or other existing toll roads probably was not feasible.

“The comparatively low population density and traffic volumes in Kansas limit opportunities for the state to build new toll roads or establish financially viable public/private partnerships,” the report concluded.

Even identifying what the state owns is a challenge, according to a former state senator whose Quixote-like quest to identify state assets ended without resolution.

Kay O’Connor, who served in the Kansas House before moving on to the Senate, said she originally asked Legislative Research for a list of state-owned assets when she served on the House Appropriations Committee in 2002. Two years later, she finally got a print-out that she said was riddled with errors and omissions. O'Connor left the Senate in 2006.

A bookkeeper by trade, O’Connor said the state’s disinclination to follow GAAP (Generally Accepted Accounting Principals) that are a hallmark of bookkeeping for small businesses, led to its failure to identify its assets.

“GAAP is a way to reduce the opportunity for error and fraud,” she said. “When you’re not using GAAP, the opportunity for error and fraud is everywhere.”

She said for example, the print-out of state assets indicated the state owned five acres of ground valued at $1 in rapidly-developing Olathe, the city she represented. However, the summary did not indicate why the value was so low.

“The information I got was just so inadequate,” O’Connor said. “It didn’t even identify the Olathe property, or whether the five acres was in one parcel or in 10 foot strips of right-of-way.”

Shortly after taking office, Gov. Kathleen Sebelius launched an initiative called BEST (Budget Efficiency Savings Team)  that included the sale of surplus state vehicles, which saved about $6 million.

While the BEST initiative has saved the state money, its results also demonstrated the insufficiency of such practices for addressing the severe budget crisis Kansas faces.

Yoder said more fundamental budget changes must be made to rescue the state from its budget woes. Those fundamental changes include reducing spending to a more manageable level and creating and maintaining a rainy-day fund to shelter the state from economic downturns.

“We’ve really ramped up spending in the past few years,” he said. “Now the reality is we’re going to have to see some cuts in agency and department spending.”

He said he was much more inclined to support across-the-board spending cuts than select spending cuts that might spare sacred cows like education.

“K-12 education is 51 percent of our general fund,” he said, and sparing education would only mean deeper cuts to other programs and services.

“It’s going to be one tough choice after another,” Yoder said.

 - Phil LaCerte

Resources:

• BEST: http://www.governor.ks.gov/LtGov/BEST/BEST-past.htm

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