One of the tenets of fiscal conservatism is limited government debt. But you wouldn’t know it by how much state debt is growing in Kansas.
Under the leadership of Gov. Sam Brownback and GOP lawmakers, taxpayer-supported state debt has increased by 50 percent over the past two years and now totals about $4.5 billion. This rise has contributed to an increase in annual debt payments from $83 million in fiscal year 2010 to $179 million in the current fiscal year.
About $850 million of the recent debt increase is new highway borrowing. Brownback and the Legislature suspended the statutory limits on highway debt in 2015, allowing the state to borrow more money than previously allowed. This borrowing was pitched as being fiscally savvy, enabling the state to finance road projects before interest rates rose.
But Brownback and the Legislature have used the highway fund as a piggy bank to help balance the state budget. So the debt effectively went to finance unaffordable tax cuts, not invest in roads and bridges.
The other major increase was $1 billion in pension debt. Brownback and the Legislature bet that they could make more money by investing the $1 billion than what the state would have to pay in interest costs on the bonds.
That wasn’t the case this past year. And if the stock market drops again, the state could end up owing more than its investments are worth.
Also, Brownback and the Legislature delayed making the required employer contribution to the Kansas Public Employees Retirement System last fiscal year. So, as with the highway borrowing, the pension debt effectively financed the tax cuts.
This growing debt, along with the state’s other budget problems, was a key reason why the state received multiple credit downgrades.
On a per capita basis, Kansas now owes $1,534 per citizen in state debt. That’s more than the national average of $1,431. It’s significantly more than surrounding states: Nebraska, $8; Oklahoma, $397; Colorado, $424; Missouri, $574.
Kansas is the high-debt point on the prairie.
And the borrowing may not be done. Brownback wants the state to borrow $530 million from private investors in exchange for future proceeds from the state’s tobacco lawsuit settlement. He also wants to borrow $317 million from the state’s pooled money investment fund.
Brownback also wants to continue raiding money from the state’s highway fund (about $600 million over the next two and a half years) and shortchanging the state pension plan (about $600 million over the next three years).
The state has serious budget problems, and it could take many years to climb out of its debt hole. But the first step, as the old adage says, is to stop digging.