Kansas looks at shuffling funds to close new budget gap

TOPEKA, Kan. (AP) — Kansas is looking at shuffling funds within state government to cover a projected short-term, $45 million deficit before its current budget year ends on June 30, an aide to Republican Gov. Sam Brownback said Friday.

Spokeswoman Eileen Hawley said Brownback's budget staff may divert fees held in dozens of special funds by state agencies into the state's main bank account. Hawley said the governor doesn't expect to cut spending to close the gap — and doing so would be difficult anyway so close to the end of the fiscal year, with most agencies' funds already spent.

Tax collections fell $74.5 million short of expectations in May, creating the deficit in the state general fund. It is the state's main bank account, financing about $6.2 billion in spending on aid to public schools and general government programs during the current and next fiscal years.

But state government has a total budget exceeding $15 billion and collects special fees and revenues in scores of smaller funds. Transferring money from them into the state's main bank account can make its bottom line look better, and Hawley said Brownback's budget staff is looking at the rules governing those smaller funds.

"Decisions will not be finalized until we have a better understanding of the June revenue picture," she said in an emailed statement.

Sen. Laura Kelly, of Topeka, the ranking Democrat on the Senate Ways and Means Committee, said the shuffling of funds fits Brownback's practice of using short-term fixes and "just leaping from one crisis to another."

"There will have to be a lot of hoop-hopping to get us to the next fiscal year," she said.

Another potential short-term fix is delaying state aid payments due to public schools later this month, though Hawley's statements did not mention the possibility. Those payments are expected to total more than $320 million.

Tax collections have failed to meet expectations 10 of the past 12 months and 22 of the past 30 months. Brownback has said he wants to examine the revenue-projecting process and announced Friday that Sam Williams, a retired chief financial officer of a Wichita-based advertising and public relations firm, will lead the effort.

Kansas has struggled to balance its budget since the Republican-dominated Legislature slashed personal income taxes in 2012 and 2013 at Brownback's urging in an effort to stimulate the economy. More recently, Brownback's administration has blamed slumps in agriculture, energy production and aircraft manufacturing for disappointing revenues.

The state already has diverted funds from highway projects and cut higher education spending to balance the current budget. Last month, Shawn Sullivan, the governor's budget director, announced $97 million in spending reductions for the fiscal year beginning July 1.

The state had expected to build up a small cushion of cash reserves before the end of June 2017, so that the shortfall in May's tax collections doesn't create another deficit for the next fiscal year, just the current one.

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JOHN HANNA, AP Political Writer. Copyright 2016 The Associated Press.
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