I traveled to Topeka last week for two days of hearings held by the House Appropriations Committee. Although I am not a member of the committee, I thought I ought to learn all I can on the topic that will occupy most of our time next session: A projected budget shortfall of around $500 million to $600 million.
David Trabert, president of the Flint Hills Policy Group—not located in the Flint Hills, but in Wichita—was the first to give testimony to the committee members. You might have read that Trabert and the FHPG released to the press the findings of a study FHPG had done. Trabert stated Kansas had about $2 billion in “unencumbered funds” stashed in more than 1,600 accounts, money that Kansas could have returned to the taxpayers.
Well, when Trabert presented his study to the Appropriations Committee, his tone was quite different. He suggested there were more than 1,600 accounts with about $2 billion in unencumbered funds, but he did not know what amount of money the state and its agencies ought to hold, and that someone ought to “look at” whether some of this money was being put to good use.
Gone was the assertion that it could have been given back to the citizens.
Committee members had the opportunity to question Trabert. Further, the heads of various agencies and boards testified over the two days, including the director of the Pooled Money Investment Board, the Secretary of Revenue, the Secretary of Labor, and the State Treasurer, as well as others.
Through testimony and questions, a host of misinformation was straightened out.
First: “Unencumbered” money is not money just lying around; it is money that has no mortgage against it and no expense invoice against it right now. “Unencumbered” actually includes spoken-for money so long as there isn’t a payment now due out of it.
Not straightforward, huh? Through testimony, we found out that more than $1 billion of this shameful pile of money is not the state’s anyway. It is held by the Pooled Money Investment Board for cities, counties and school districts—part of that money is property tax and other tax money that was paid to cities, counties and schools in June and will be needed for bills in the coming months.
So, the municipalities have the money held by that board in sort of a money-market account to earn a little interest while they wait for bills to come due, like salaries and materials.
We found out that part of the $2 billion is the $300 million in the unemployment fund, which we can’t just give back, either; it, too, is held for a real purpose.
The Secretary of Revenue has a large pile of money in an account, but it holds sales tax receipts collected across the state and sent to her department, waiting for the day she is obligated to pay it out to cities, counties and other municipalities. Again, it is being held for a reason and can’t just be used for any old purpose. But, because it isn’t time to pay it yet, it is unencumbered.
We discovered that most of the state agencies and boards keep about a two-month supply of cash in reserve, and it was also included in this $2 billion find. And who would argue that’s inappropriate?
By the end of the second day of hearings, we could see essentially all the $2 billion has an earmarked purpose, but the impression has already been set and many folks now believe there is a pile of money lying around.
As to the 1,600 different accounts, the state treasurer was asked why he had so many funds set up; he informed us that each was established according to laws passed by the legislature through the years.
Maybe we can use the information about all those accounts to list and review governmental functions, even if the fund balances are appropriate.
Maybe we can review the programs and ascertain which are ineffective, obsolete or not essential.
We also may find savings here and there, even possibly several million dollars. But clearly, there is no windfall just sitting there that would wipe out a projected $500 million deficit.
Perhaps you recall last spring I advocated that when someone is pushing a viewpoint, we ought to ask, “Why? What is his motive?” The members of the Appropriations Committee asked why again and again, and those members got answers. I appreciate their digging.
By the way, Flint Hills states it is going to zero in on schools next, looking for hidden and wasteful money.
You can reach me by e-mail at: email@example.com, or write me at 201 Meadow Lane, Marion, KS 66861. Thanks for listening!