A free market group today said a state council’s decision to “borrow” $250 million from idle state funds to make overdue payments to school districts was just a symptom of gross overspending in which the state has engaged.

In a statement issued after the meeting, Alan Cobb, state director of Americans for Prosperity-Kansas, said, “Today was the first of many days of reckoning for years of overspending."

“The political gamesmanship being played by the Governor is unfortunate but not surprising. She has the authority and ability to shore up the budget but refuses to do so, and wants the 2009 Legislature to do the heavy political lifting,” he said.

Gov. Kathleen Sebelius initially asked the State Finance Council to provide authority to borrow $400 million from idle funds. But, House Majority Leader Ray Merrick, a Stilwell Republican, said that request was shot down by Republicans who thought it was excessive.

Various other motions for varying amounts also were made and denied before the nine-member body agreed on the $250 million compromise, a compromise that even Sebelius ultimately supported. The only dissenter was Senate Minority Leader Anthony Hensley.

The $250 million should allow the state to make scheduled payments to school districts and to meet other obligations until income tax collections start to roll in after April 15.

However, Merrick said the state would have an obligation to pay back the agencies from which the funds will be taken before the fiscal year ends June 30.

“And, we already borrowed $300 million in September, which was less than the $400 million the Governor sought at that time, so we’re going to have to come up with $550 million somehow between now and the end of June,” Merrick said. “I don’t have a high comfort level with that.”

At least, Merrick said, idle state funds don’t require loans to be repaid with interest. He pointed out that Kansas already is more than $3.5 billion in debt, and that the state pays some $350 million a year in annual interest fees.

Merrick said while it’s convenient at times to have idle funds from which to borrow, he couldn’t help wondering “Why do we have so much money laying around in state funds?” He noted this is a time when the state is facing a budget crisis of perhaps unparalleled magnitude.

A question also arose during the Finance Council discussion as to whether borrowing from idle funds was even legal given the fact the state is staring at a negative ending balance.

“As Senator Derek Schmidt noted…, it is far from clear the state has the legal authority to issue the certificate of indebtedness, as the official ending balance for this budget year is below zero,” Cobb said.

“Essentially the state is borrowing more money despite logging a negative ending balance," he said. "Continually borrowing from our own accounts is not sustainable at the family level, and it certainly can’t be supported long-term at the state level.”

Merrick said the contention by AFP that Kansas’ problem was a function of overspending was right on the money.

“The budget’s gone up 48 percent since Gov. Sebelius has been in office,” he said. “We don’t have a budget problem, we have a spending problem.”

- Phil LaCerte

Resource:

• AFP-Kansas: http://www.americansforprosperity.org/kansas

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