Wednesday, December 10, 2014

Breaking: Gov. Announces Cuts, Reality Remains Unchanged

By Duane Goossen

The allotment plan just issued by the governor buys a little time with mostly short-term budget fixes to get Kansas through fiscal year 2015. However, the plan does little to alter the main dynamic at play in the Kansas budget: Even though the current set of expenses are lean, they far exceed a diminished revenue stream.

The governor’s plan to plug the FY 2015 budget hole does two basic things. First, it proposes transfers of $217 million
 (*) to the general fund from various other funds. These transfers require legislative approval. If approved, they will count as one-time revenue to the general fund. Second, the governor uses his allotment authority to unilaterally cut approved FY 2015 expenses by $62 million. (*)

Here’s how the FY 2015 general fund profile looks as a result of the governor’s actions, assuming legislators approve the transfers:

Under the governor’s plan, by using up the beginning bank balance, raiding other funds, and making some spending cuts, the general fund will finish FY 2015 with a zero balance — the bare minimum.

That moves the focus for the state’s budget problems squarely to FY 2016. The general fund profile below shows the new outlook for FY 2016.

Without new revenue, lawmakers will need to cut approximately $669 million just to keep the general fund solvent in FY 2016. That would be more than a 10 percent cut to every single item, on top of the cuts the governor already imposed in FY 2015.

Even under the governor’s new plan, the reality remains the same:

Lawmakers had better find a way to increase revenue, or the cuts to education and other state programs are going to be deep and highly distressing.

* Some of the expenditure "cuts" shown in the governor’s plan are actually revenue transfers to the general fund. For example, Dept. of Transportation expenditures are cut by $7.8 million, which benefits the Highway Fund, but the savings from the Highway Fund would be transferred to the general fund if approved by the Legislature.

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