Local legislators brace for crunch

    The fallout from a shaky national economy has hit Kansas, and it will likely force lawmakers to make tough spending decisions on everything from education to the next comprehensive transportation plan.
    Eariler this week, state officials and university economists predicted that the state will be $137 million in the hole in June 2009. They said if lawmakers don't address the problem, that shortfall could be closer to $1 billion by June 2010.
    Gov. Kathleen Sebelius has already directed state agencies to cut their spending by 3 percent, and she has asked them to recommend an additional 5 percent in budget reductions by July 2009.
    The Kansas Constitution forbids budget deficits, which means that Sebelius and lawmakers will have to find ways to plug the anticipated shortfall — either through reducing spending or raising taxes.
    Sebelius spokeswoman Nicole Corcoran said Friday that the governor is trying to protect social services, state aid to schools and money used to retire outstanding debt from budget cuts.
    "She is working with the budget director and her team to identify further savings where savings can be identified," she said in an e-mail to a Globe reporter. "This is a work in progress that requires serious focus and attention, and efforts are under way to deal with the financial issues brought on by the negative national trends."
    Corcoran said at this time, the governor sees a possible tax increase in one area: raising tobacco taxes and using the money to defray health care costs. She noted that Sebelius has supported that proposal in the past.
    Rep. Pat George said Thursday that the current economic climate, coupled with the expected budget shortfall, means that the state will have to tighten its belt next year.
    "It's a tough time, both in the private sector and the public sector and globally," the Dodge City Republican said. "It doesn't look like it's going to get any better for a while, so the government needs to practice what we preach, and let's be careful on the money that we're spending."
    George said he doubted that lawmakers would be interested in raising taxes to help close the budget gap.
    House Speaker Melvin Neufeld, R-Ingalls, said the Legislature will have to consider every possibility for cutting spending and for boosting revenues as well.
    "You've got to have all options — revenue as well as program changes, enhancements, structures of agencies,"  he said. "It's all on the table."

Rethinking promises
    The state's latest forecast says that revenues for the current fiscal year are likely to drop by $211 million, or 3.5 percent, from what officials had anticipated. The forecast also predicts that revenues will remain flat for the next fiscal year, which will be budgeted in the upcoming legislative session.
    Sebelius' directive asking state agencies to cut spending by 3 percent is expected to yield about $60 million in savings, and the state has taken in about $56 million in one-time privilege fees from prospective casino developers, the Associated Press reported earlier this week.
    But that won't be enough to close the budget gap, which could get even worse if lawmakers don't take steps in January to fix the problem.
    The anticipated shortfall means that the Legislature will be taking a hard look at all areas of state spending, including earlier promises to put more money into public schools, higher education and social services.
    Speaker Neufeld said the Legislature will have to look at ways to streamline state operations while protecting vulnerable Kansans and ensuring that children are as well-educated as possible.
    "We have to be very selective," he said. "You can't just do a meat-ax approach. But we have to look for every possible savings."
    House Minority Leader Dennis McKinney, D-Greensburg, said that lawmakers will consider several options for closing the budget gap when they reconvene in January. But he added that he would not want achieve that goal by reducing the number of elderly and disabled Kansans who receive home- and community-based services.
    "If we cut people off in-home services, then they'll wind up in nursing homes, which costs us more," he said. "My concern is as we go through this, the budget should not be balanced on the people who are most in need."
    The state has promised to provide $3.2 billion in aid to public schools in the current fiscal year, and McKinney said that lawmakers may have to take a second look at that promise. But he said that moving too far in that direction could end up hurting the state's economy.
    "We have finally started to catch up in the area of technical education, because employers in Kansas are saying, 'We need more highly skilled people in the technical field. If you provide them, we will hire them,'" he said. "And to cut back on technical education right now would probably be counterproductive in terms of job growth."

Making choices
    Rep. George, who serves on the House Appropriations Comittee, said he thought the Legislature would be least likely to cut programs for elderly and disabled Kansans. He added that lawmakers will take a closer look at state aid for public schools, but they may decide to freeze that assistance at its current level instead of increasing it.
    George said that other money-saving options could include deferring maintenance for the Regents universities or reducing the scope of the next comprehensive transportation plan. The current 10-year plan ends in 2009, and lawmakers are expected to begin discussions of a new one during the next legislative session.
    "We might not be able to get a 10-year plan put together," George said. "It might be a two-year plan that would then go into a 10-year plan, or at least start the 10-year plan and ramp up. Instead of a base level of spending, it might be a little less than what we'd anticipate for the first year or two."
    He said the House Appropriations and Senate Ways and Means committees may return to Topeka in December so they can focus on the budget without getting distracted by other issues.
    "It certainly gives us a head start, and we could hit the road running in January that way," George said.

    Reach Eric Swanson at (620) 408-9917 or e-mail him at eric.swanson@dodgeglobe.com.