Solution to Kansas budget crisis offered

At a meeting of the South-central Kansas legislative delegation on January 5, 2010, Dave Trabert, president of the Kansas Policy Institute spoke to legislators about ways that Kansas can make it through the upcoming legislative session without raising taxes or cutting essential services. Due to the relatively short time limit given to speakers he was not able to present all his remarks, but his complete remarks are presented here.

Good evening. My name is Dave Trabert and I’m president of Kansas Policy Institute.

I can’t imagine what it must be like to be in your positions as you head to Topeka next week, facing large budget shortfalls and being pressured to raise taxes.

The situation has been framed as a choice between raising taxes or cutting essential services, neither of which are good choices.

I’m here tonight to share some good news: our research strongly indicates that neither of those bad choices is necessary.

State agencies are probably holding more than enough cash reserves to get us through the immediate crisis … and we can reduce spending without cutting services by making government operate more efficiently.

I can’t cover everything in 3 minutes, but the highlights are in your packets.

The first document is a list of unencumbered carryover cash balances held by each state agency. Not counting money set aside for unemployment, the billion in idle cash that belongs to local governments and several other funds, state agencies started this year with over $800 million in carryover cash reserves. Universities had another $300 million.

Sure, some of it might not be readily available. But no audits have been conducted to prove that they need it. Should we just take their word?

Next, tax increases. Revenues are down now because of the recession, but taxes increased 40% from 2001 to 2008 … more than double the rate of inflation.

But what about that $billion in “cuts” and “exemptions”? The Kansas Department of Revenue’s list is the 3rd document … the top 5 amounts are property tax, car tax, EIC, single income rate reductions and food sales tax rebates.

Do they really believe that these changes caused the budget crisis? Or could it be that spending grew faster than revenues in 4 of the last 5 years?

And how can you deal with school districts suing taxpayers for more money?

Well, they also have large cash reserves … not counting capital projects and debt service, they started this year with $700 million left over from prior years … and despite their protests, [Kansas Deputy Commissioner of Education] Dale Dennis says they can access that money … if they want to.

Schools are also a great example of how government can operate more efficiently.

We released a study today showing that per pupil expenditures in 2008 ranged from $9,017 to $25,240. If the high spenders had just been at median for similar sized districts, it would have saved $636 million. Legislative Post Audit also says many districts could save a lot of money, offering 80 recommendations last year.

The State has many viable options to get through this crisis without raising taxes or cutting essential services. That is really good news!

It won’t be easy, but we can come out of this recession in good shape and ready to take on the competition for jobs and economic growth.

Kansas Policy Institute stands ready to help. Thanks for your time.

The just-released study that Trabert referred to is A Kansas Primer on Education Funding, Volume III: Analysis of K-12 Spending in Kansas.


2 thoughts on “Solution to Kansas budget crisis offered”

  1. Dave: I like how you explained that the Kansas Budget Shortfalls have been framed as choice between raising taxes or cutting essential services, neither of which are good choices.
    The choices of carryover cash balances, is the start of a good solution to the problem too. I would like to put another idea forward. There is an accounting change to health care costs that all qualified city, county, school districts, and the state could enact that would save approximately $1 billion per year. These monies could be added to your solutions to greatly reduce the deficits we see going forward. The hard thing for me, as well as all taxpayors should ask is how do you get the governmental entities take advantage of solutions that are available, but they refuse to enact the changes necessary, and continue to use the cutting services, and raising taxes solutions , while all along saying it is a new idea, or we are searching for new ideas, while all the time they are like an ostrich with their head in the sand. How can we get them to pull their heads out of the sand, and look for solutions that do not entail hurting the very people they are here to serve?

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