State’s budget woes worse than expected, Graves says

TOPEKA-The state’s budget crisis is looking much worse than the $426 million shortfall projected last month.

Gov. Bill Graves told the Kansas Press Association Board of Directors Thursday that when the next consensus revenue estimates are released on March 8, the shortfall could be as much as $150 million more than the $426 million his budget proposal was based on.

Revenues continue to run below previous estimates because the low price of oil has reduced the state’s severance-tax revenues, and the slow economy has reduced the return on the state’s invested funds, the governor said.

Graves said some legislators are in serious denial about the crisis. Most of the legislators have never had to cut a budget because throughout the economic boom of the 1990s, the question has been where to add money, even while cutting taxes, he said.

Although Graves disagreed with some of the budget plan presented last month by Senate President Dave Kerr, R-Hutchinson, and Sen. Steve Morris, R-Hugoton, he said he appreciated their efforts because they offered concrete ways to deal with the problem.

The governor said he was tired of hearing “sound-bite solutions” and suggestions to simply cut fraud, waste and abuse without identifying it.

Last month, Graves reacted sharply to the tongue-in-cheek “Tax Me More Fund” and mailing envelopes proposed by conservative legislators to show their opposition to tax the governor’s proposed tax increases. Graves suggested the legislators just mail in their no votes to the Statehouse.

Graves said that because he is on his way out, he could act without considering the political fallout.

Kerr agreed with Graves’ dire assessment of the state’s budget problems.

“March 8 will be a sobering day,” he said at his weekly Friday press conference. Statements last week that revenue will be down another $100 million were probably too optimistic, he said.

If the governor’s cigarette tax is enacted, Kerr said, the new revenue numbers were likely to swallow up the entire $111 million the tax is expected to bring in. The state was facing very deep cuts in virtually every department and division of the state government, Kerr said.

“It’s going to take all of our collective wisdom to figure our way through this one,” he said.

The rescission bill to cut the current year’s state budget that was a key part of the Kerr-Morris budget plan was abandoned last week for lack of support in the Senate.

“We did fall a bit short in having enough people to pass the bill,” Kerr said. “It was very close. It’s likely that come April, people will be regretting not having voted for those very small rescissions that would have helped avoid the very deep cuts that are ahead. We’re going to be peering into a huge crevasse, I believe, after the March 8 numbers are finalized.”

But Kerr said he thought the rescission debate had educated the senators about the seriousness of the problem.

“I’m not sure that the same education process has taken place over in the House,” he said.

Another key part of the Kerr-Morris plan is a bill to reduce the required State General Fund ending balance from 7.5 percent of expenditures to 5 percent, freeing up $104 million.

“The ending balance bill is being held until after March 8, when I believe it will become a good deal more popular,” Kerr said.

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