State budget solutions aren't simple

The Kansas Policy Institute is skilled at making the state's budget solutions seem simple. Too bad that's not really the case.

The free-market group based in Wichita initially suggested that the state could cover its budget shortfall with $700 million in fund balances that school districts had at the end of the past fiscal year. But as school officials quickly pointed out, most of those funds are designated and can't be used for other purposes.

Now the institute is running an advertising campaign accusing Gov. Mark Parkinson of being untruthful about state spending and the size of the budget gap.

A full-page ad in the Sunday Eagle claimed that the next fiscal year's budget gap is actually only $122 million — not the more than $400 million shortfall calculated by legislative research staff and cited by lawmakers from both parties. And the ad said the primary budget problem is that Parkinson wants to increase state spending by $380 million.

But it's not that simple.

It's true that based on current projections, state tax revenue is expected to be about $122 million lower next fiscal year, and that the governor's general-fund budget proposal includes increased spending. But the ad doesn't recognize that the general fund is part of a larger all-funds budget or that the state has increased costs.

For example, $300 million of the general-fund spending increase is to replace federal stimulus money for Medicaid and education that will no longer be available. The state cut money from this year's general-fund budget knowing that stimulus money would offset some of it. If the state doesn't replace this one-time federal money, local schools and Medicaid will experience more large budget cuts.

(On the flip side, Parkinson often cites how the state already has cut $1 billion in general-fund spending, but that doesn't recognize that federal stimulus money helped offset some of those cuts.)

The other $80 million in spending increases are for a scheduled payment increase to the Kansas Public Employees Retirement System and the state's debt-service payments (this year the state only paid the interest on its debts, not the principal). It might be possible for the state not to increase those payments, though it would make its long-term budget problems even worse and might hurt its credit rating.

To its credit, the institute's advertisement offered some suggestions for covering the state's budget shortfall, such as selling some state property and privatizing some state services and functions. The Legislature should consider all such ideas, though they are unlikely to be enough, as the ad claims, to "cover the revenue shortfall without raising anyone's taxes or eliminating services."

Lawmakers from both parties know that the budget challenge is great and will require painful cuts or tax increases, or a combination of both. The Kansas Policy Institute, which has a smart staff and is trying to convince the public that a tax increase isn't needed, presumably knows this, too.