State fund raids continuing
They always seem like good ideas at the time – laws requiring cash to be stashed away for rainy days, important priorities or just fiscal prudence into the future. But there’s no such thing as spare change in Topeka anymore, which makes these dedicated funds ripe for sweeping and ends up turning the legislators who voted for them into liars.
One new case of foresight undone by reality was the 2005 law creating the Kansas Oil and Gas Valuation Depletion Fund. The goal was to provide counties whose tax base is heavily reliant on energy production with a safety net for industry downturns, when they could draw down severance taxes set aside during the booms. But Gov. Sam Brownback vetoed a 2012 bill aimed at preventing the state from raiding the fund. Fifty counties sued in 2013, claiming the state withheld $7.6 million in payments they were due. Then the 2014 Legislature finally gave the governor what he wanted, abolishing the fund and calling for the transfer of any leftover money to the state general fund.
In October the final payments went out to counties, 16 of which in western Kansas saw their total property values decrease by more than 20 percent this year because of low energy prices, according to Associated Press. So just when the oil and gas trust fund is needed most for exactly its intended purpose, it’s gone.
Similarly, multiple governors and legislatures have treated the Kansas Endowment for Youth Fund like a suggestion rather than a designated reserve. It was set up as a way to invest and grow part of the $1.6 billion proceeds of the multistate tobacco settlement, and to fuel programs to benefit children long after the annual payments lapse. But in the past 15 years the fund has been raided of about $200 million, such that its balance could dwindle to $140,000 by fiscal 2017. Brownback didn’t start this thievery but has kept it up – contrary to his recent stated desire to coordinate and improve early childhood education in Kansas.
The 10-year, $8 billion transportation plan passed in 2010 provides the biggest target for raiding, of course, and has been tapped for more than $400 million since fiscal 2013. No wonder the Kansas Contractors Association has two billboards along the Kansas Turnpike featuring an armed man in a ski mask and the message: “This is highway robbery – $1 million per day taken from roads and bridges.”
State budget problems over the years have made other earmarked funds vulnerable, with fees paid to state agencies and local government revenue sharing among the casualties. There are new concerns that a 40-year-old fund that diffuses the cost of medical malpractice claims could be swept. And with the challenge in the wake of the 2012 income tax cuts and precipitous revenue slide that of keeping the state budget above water, it’s easy to forget that state law requires a 7.5 percent ending balance.
Current and past state leaders have defended the fund raids as necessary. But each one is a broken promise.
For the editorial board, Rhonda Holman
This story was originally published October 31, 2015 at 7:06 PM with the headline "State fund raids continuing."