State’s cash flow may be a sign of a new economy

Kansas will borrow $700 million from itself to provide the cash needed to pay its bills and other obligations, including $31 million worth of unpaid tax refunds. The money will come from various state pockets but must be repaid by next July 1.
Democratic Gov. Mark Parkinson also used his emergency budget powers to reduce state spending by another $160 million, making the borrowing more palatable to the Republicans on the State Finance Council, the body that authorized the transaction.
The decision to operate on borrowed money will put more pressure on the 2010 Legislature unless the Kansas economy makes a strong recovery over the next 12 months. Gov. Parkinson hasn’t ruled out asking lawmakers to raise taxes but has not been encouraged to go that route by the Republicans who dominate both houses.
Appropriations Committee Chairman Kevin Yoder told an Associated Press reporter that “a lot of us feel that this budget still spends too much money. We’ve got to ratchet down spending.”
Ratcheting down state spending means cutting funds for education. The public schools, K-12, use about 52 percent of the general fund; total spending for education accounts for 64.6 percent of the 2009 budget.
If the Legislature continues to cut spending on public schools and the state universities, more of the burden will be passed to local school districts and to university students and their families. A third alternative, of course, is to spend less by reducing teacher salaries, eliminating classes, reducing maintenance and taking other poor-boy steps that will reduce the quality of education Kansas provides its youngsters.
At this point in the recession it is by no means certain that the American people will return to the patterns of consumption that have provided Kansas the sales tax income needed to make up a large part of each year’s budget. If the savings rate stays high and consumers keep a tight grip on their wallets, new tax structures will be needed.
It would be prudent to assume this will be the case for the balance of this year, and in 2010, and plan accordingly.
Starting with first principles, Kansans should decide that providing the best possible education for their children, from kindergarten through graduate school, should have the highest priority. The goal should be to increase the number of hours youngsters spend in school each day and the number of days they spend in school each year so that our students can match the educational attainments common in the other wealthy nations of the world. K-12 spending should rise, not fall.
Then, as Rep. Yoder implies, the other elements of the budget should be considered. Should prison terms be shortened to cut the system’s cost? Should highway maintenance funds be slashed? Maybe the number of district courts should be reduced to cut costs there. Perhaps one court for every 25,000 people would be sufficient. Perhaps parks and state lakes should be opened to the public on alternate years? Do we really need all of those inspectors to check on restaurant kitchens and meat packing plants? Why not do away with the Kansas Bureau of Investigation and the Highway Patrol and let the 105 county sheriff departments earn their keep?
Of course, a thorough study could also discover that Kansas has been pretty well governed and that the services it provides meet genuine needs and contribute to the well being of its citizens. In that case, the lawmakers could get to work and create a tax structure that provides the money needed to run the state.
If new spending patterns don’t create enough sales tax income, then the rate should be increased or, better yet, a new bracket could be added to the income tax to pick up the slack.
Legislators should be having these kinds of conversations across the state with their constituents now or early in the fall so they can convene in January ready to remodel the Kansas tax structure to fit the changing economic scene. Crossing their fingers and wishing on a star may not be enough.

— Emerson Lynn, jr.