Kansas has 2 days worth of reserve funds, according to study

Kansas could run its government for only two days on its cash reserves, according to a study by Pew Charitable Trusts.

Pew analyzed cash reserves for all states at the end of the most recent fiscal year and estimated how long state government could continue to function if it relied on reserves.

Kansas ended the 2016 fiscal year in June with a $35 million balance, which Pew calculates would last two days. The average state has about 29.2 days worth of reserve funds, for comparison.

“The average state could run for about a month and Kansas could only run for two days. … It’s frightening. It’s absolutely frightening that we only have two days of reserves if some kind of catastrophe hit,” said Rep. Kathy Wolfe Moore, D-Kansas City, a member of the House Appropriations Committee.

Kansas has struggled to balance its budget since GOP lawmakers slashed personal income taxes in 2012 and 2013 at Gov. Sam Brownback’s urging, hoping to stimulate the economy. The state’s tax collections have fallen short of expectations for 10 of the past 12 months and 31 of the 44 months since the first income tax cuts took effect in January 2013.

Brownback’s spokeswoman, Eileen Hawley, said in an e-mail that the report “reflects the steep drop off in both the oil and agriculture economies, as states with similar economies to that of Kansas – Nebraska, Oklahoma, Iowa, and the Dakotas – have experienced similar declines in their state reserve funds.”

Hawley is correct that nearby Nebraska’s reserve funds, which totaled $1.5 billion in 2015, have declined over the past year. But at the end of the 2016 fiscal year, Nebraska still had $1 billion in reserve funds, which could last 87 days, according to Pew’s analysis.

Each of the other states Hawley named has reserves that would last beyond the 29-day national average, with the exception of Oklahoma.

North Dakota has $573 million in reserves, for 57.3 days. Iowa has $892 million in reserves, for 45.4 days, while South Dakota could go for 35.5 days on its $143 million in reserves, according to Pew’s analysis.

Oklahoma could last 13.3 days on its $231 million in reserves.

Hawley said the Pew report “does not reflect how the administration has saved KPERS (the state’s pension system) from bankruptcy, invested in roads resulting in top national rankings, and invested more in K-12 education than ever before, all while returning money to the pockets of hardworking Kansans.”

Duane Goossen, the state’s former budget director, said the budget situation is even more tenuous than the Pew study shows.

Kansas ended the last fiscal year with $35 million because it delayed a nearly $100 million pension payment and about $75 million in school payments until this fiscal year. If those payments had been made last year, the ending balance “would have been far below zero,” said Goossen, who served under the three governors who preceded Brownback.

This story was originally published September 27, 2016 at 1:26 PM with the headline "Kansas has 2 days worth of reserve funds, according to study."