Politics & Government

Panel hears merits of 'rainy day' fund

TOPEKA — Members of a Kansas Senate panel expressed strong support Tuesday for a proposed amendment to the state constitution that would create a "rainy day" fund in the budget.

The plan, pushed by two members of the Senate Ways and Means Committee, would force legislators to automatically set aside a percentage of state revenue when collections exceed projections. Called a budget stabilization fund, the money would be tucked away earning interest until the budget reached dire levels.

"The other caveat is that legislators can only take out enough to fill the hole," said Sen. Laura Kelly, D-Topeka, co-sponsor of the amendment with Sen. John Vratil, R-Leawood.

The committee heard testimony about the plan on Tuesday, but took no action.

If approved by voters, the provision would take effect in 2011. If the state collected more than 3 percent in excess of revenue projections for a given year, up to 1 percent would be placed in the reserve account. In years revenue declined or increased by less than 3 percent, nothing would be set aside. The fund would be capped at 7.5 percent of total revenue collections.

Researchers estimate that had the account been in place since 1991, the state would have $465.7 million in reserve, more than enough to plug the projected $416 million hole in the 2011 budget.

Sen. Dwayne Umbarger, R-Thayer, said the provision would remove election year politics from the budget process and could smooth out financial fluctuations.

The issue has come up as the Republican-controlled Legislature and Democratic Gov. Mark Parkinson struggle to find a solution to a budget gap that is projected to reach $416 million in the next fiscal year.

Parkinson has endorsed the amendment, although it doesn't require his signature to go on the November ballot.

State Treasurer Dennis McKinney testified in support of the proposal. McKinney, the former House minority leader from Greensburg, championed such reserve accounts as early as 1998, but they never advanced.

"Perhaps, in part, because I didn't do a good enough job selling the idea," McKinney said. "Perhaps also because, in our election cycles, we have trouble thinking long term. It is politically more expedient to cut taxes or fund new programs."

Senators approved a similar measure last year that is awaiting action on the House calendar.

Kelly said the stabilization fund would allow governors and legislators to avoid making damaging cuts, such as the treatment and rehabilitation programs slashed by the Department of Corrections.

"This will slow us down in building up those programs, but this will protect us also," Kelly said.

However, senators noted that there are special funds for transportation, education and fees collected by certain agencies that are raided routinely by legislators looking for money, even in good years.

"You just know how things go. There will be efforts to get their hands on that money somehow," said Sen. Pat Apple, R-Louisburg.