For a perverse variety of reasons, the media–local and national and even international–have fretted way more per capita about Kansas’s budget problems than they have about the nation’s writ large. As the Sentinel observed on Monday, even the Guardian of London has gotten in on the act with a predictably ill informed bit of tut-tutting headlined “…Kansas feels the pain of massive Trump-style cuts.”
The informed reader responds to this headline, thinking ‘If only Trump had made massive cuts and if only the Kansas legislature had done the same.’ Of course, nothing like this has happened either in Washington or Topeka in the recent past or is likely to in the near future.
This is just more of the same media malpractice. Dave Trabert of the Kansas Policy Institute is happy to correct it. He argues that there is ample room to cut spending and enhance revenue in Kansas without causing pain–and, importantly, without raising taxes. In the spirit of full disclosure, KPI and the Sentinel share two board members and have a shared-services agreement, but those who may doubt the legitimacy of the Sentinel’s endorsement are welcome to peruse Trabert’s more involved piece.
According to Trabert, Kansas has a menu of options to close a $396 million budget shortfall. That menu combines revenue enhancements and spending reductions to the tune of $960 million. In other words, there is room for ample horse trading and favor swapping.
Although the honorable move would be to return the tobacco settlement to the tobacco companies from which it was extorted, the prudent move would be to securitize it. Doing so would generate roughly $265 million in FY 2018 and FY 2019. Another likely source of revenue is the Turnpike Authority. In 2016, the KTA registered a $37 million profit and finished the year with $120 million in cash and receivables. Better to tap the KTA for additional cash than to tap private business owners. A royalty of 15 percent on tolls would increase state revenue by $33 million or so over the next two years.
Trabert sees two major ways to reduce costs without the much-ballyhooed “pain.” Local school districts, he argues, began this year with a record-setting $911 million in unencumbered cash reserves. Much of this “represents aid collected in prior years but not spent.” Alvarez and Marsal, the global consulting firm contracted to perform a statewide efficiency review, have recommended that cash reserves be limited to a maximum of 15 percent of current operating costs. The excess would be deducted from the following year’s state funding. “Based on 2016 spending,” says Trabert, “doing so would produce a one-time savings of $196.5 million next year.”
As a final measure, Trabert recommends that Gov. Sam Brownback use his discretion to lop off 3 percent of General Fund spending fat, careful, of course, to avoid the sacred cow of K-12. Last year, the legislature required that the governor reduce spending. This year, on his way out, he might even enjoy it.
“Some of those options may not be ideal policy,” Trabert argues, “but each is much better than foisting a large, unnecessary tax increase on citizens.”