Budget woes ‘a math problem’

By BOB JOHNSON
Register City Editor

Register/Bob Johnson
Sen. Derek Schmidt visits with Doris Hill and Tom Maxwell in Iola Thursday during a swing through Allen County to meet with constituents.

The state’s $1.2 billion revenue shortfall is “a math problem,” Sen. Derek Schmidt, an Independence Republican told Iola constituents Thursday.
“I have to give Gov. Mark Parkinson a lot of credit, he realizes it is a math problem and his approach” — making cuts when revenue figures dictate — “was the right thing to do,” he said. “The math is there. How to make the budget work comes down to policy decisions.
“The state’s economy is rough and I’d like to hope that we’re at the bottom, but I’m afraid we’re not. I suspect we’ll have another round of cuts this fall. The only way to avoid more cuts is for revenue projections to hit their targets every month. That hasn’t happened yet.”
Schmidt foresees another year, maybe two, of economic hard times in Kansas, compounded by federal stimulus funds drying up at the end of next year.
If there is a silver lining to the economic troubles, it is what has been learned, Schmidt said.
“When money was plentiful we didn’t focus on changes that needed to be made. It’s healthy to consider policy decisions and if we manage them right we’ll come out better in the long run,” he said.
An example, he said, was how flagging revenue prompted a review of three financial service agencies within state government that led them to be combined into one office, saving $500,000 a year.
“The good news is that we’re a lot better off than some other states, such as California, Michigan and New York.”
Asked whether hard times would lead Kansas to release inmates ahead of when they should be freed, Schmidt said that won’t occur.
“We directed the Department of Corrections to save as much money as possible, rather than try to micro-manage, and the result was that some facilities were closed and ones that were to be built, including Yates Center’s, were delayed,” he said. “Inmate population was less than bed numbers.”

SHARON UTLEY, Allen County treasurer, said sales tax exemptions had forced the need to raise local property taxes. Schmidt noted the exemptions have some positive aspects.
“Taking sales tax off Girl Scout cookies doesn’t have much effect on a community, but has a big effect for the Girl Scouts,” he said. Schmidt noted a company such as Boeing, with plants in several states, would look more favorably on Kansas for expansion because of the sales tax exemption.
Schmidt acknowledged there was a long list of exemptions that when taken individually don’t have much impact, but “put together they do.” Heavy hitters include exemptions on farm equipment, services and manufacturing equipment.
Schmidt said Kansas and other states could protest federal legislation and policies, but “at the end of the day the federal government can trump about anything we can do. Sometimes it’s not smart to take on a fight you can’t win.”
Schmidt said he was confident the U.S. Senate would remove rough edges from health care and cap-and-trade legislation. “We have enough headaches in Kansas without dealing with federal ones,” he said.
Whether more federal stimulus money will be sent states’ ways is anyone’s guess, Schmidt said.
“There are a lot of pieces to stimulus funding,” including money that has kept Kansas schools from suffering greater financial woes had it not been offered.
“A useful part is that Washington is paying more of its bills. Medicaid had been funded 60 percent by the federal government, 40 percent by the state and its a big and growing program. Now, the federal government is paying 66 percent; I think it should pay 100 percent.”

SCHMIDT SAID he eagerly awaited a statewide campaign for the Republican secretary of state nomination and that it was to his advantage to be in the middle of a four-year term in the Kansas Senate. “If I lose, I’ll still be a senator.”
His opponent for the GOP nomination is Kris Kobach, former chairman of the Kansas Republican Party. Kobach, who teaches at the University of Missouri at Kansas City, ran for Congress in the Third District in 2004 and lost to Democrat Dennis Moore.

A SECOND nuclear unit will be built at the Wolf Creek Generating Station near Burlington some day, Schmidt said.
“I don’t know when, but it will happen.” Additional nuclear power will find its way to the grid, Schmidt said, when funding surfaces to meet exceedingly high costs of construction.
“The Wolf Creek unit cost $3 billion when it was built 25 years ago,” he said. “A second unit would cost $8 billion to $10 billion. That’s beyond the financial capacity of (Wolf Creek owners) Kansas City Power and Light and Westar.
“They’d have to go outside the region to find funding.”
Meanwhile, the Legislature intends to make Kansas as attractive as possible for additional nuclear generation, Schmidt said. “At some point it’s going to happen and we want Kansas at the top of the list.”
The recent economic downturn has delayed need for significant additional generation in eastern Kansas, but Westar has been aware for years that power needs will increase, Schmidt said.
“Four years ago Westar talked with several southeast Kansas counties about a coal plant,” then pulled back when the economy started to sour and the Legislature and Gov. Kathleen Sebelius clashed over permitting two coal-fired plants at Holcomb. “The company will add capacity, either coal or nuclear.”
Regarding how soon a coal-fired plant in western Kansas would be built now that it has met with state approval, Schmidt replied, “That just put the state out of the way. They still have the Environmental Protection Agency review.”