January 2009
Jan. 29, 2009
(Distributed to Kansas newspapers Jan. 26, 2009)
The just-past spending spree
It might just be worthwhile to consider that those Kansas House and Senate members we’re depending on to fix the state budget have already gone through one of the wildest spending sprees in memory.
That wild spree? It was their campaigns to get to hang out at the Statehouse. Now that the dust has settled and the signs have been pulled up and stored in the garage for the next campaign cycle, we’re learning just how much dust was raised during legislative campaign races—and the cost of that dust.
Figures released by the Kansas Secretary of State show that the candidates fighting for the right to represent you in Topeka spent nearly $8 million for the honor—and that’s just for the candidates who made it through the primaries to the big dance, the general election.
The 125 campaigns for seats in the Kansas House totaled $3.8 million, averaging $30,400 but ranging widely from nothing—for an unopposed candidate who won reelection—to $109,000—for a candidate who lost.
In the Senate, the campaigns ranged from $10,500 each for two winning candidates to a whopping $204,000 for another winner who realized that in campaigns, only a fool loses with money left in the bank on Election Day. In total, Senate candidates who made it to prom night spent a total of $4 million in their battle to represent their districts. The average per-race cost is about $100,000, about right, we figure, for districts that are about three times bigger than House districts.
Tens of thousands of dollars also were spent last year by candidates who were weeded out at the primary election in August, who presumably now have the signs, the campaign cards, maybe T-shirts to show their friends and children and grandchildren—to reminisce about their dabble in electoral politics.
That’s a lot of money to spend on campaigns, and the sheer size of the efforts is going to raise thoughts about too much money in politics. It’s a natural.
Except…for the uneven results. It wasn’t only money that won the majority of votes for successful candidates—ask the Democrat who spent that $109,000 on his Johnson County campaign and was defeated by an incumbent Republican who spent “just” $51,000 on his campaign.
If you enjoyed the direct mail from candidates, the phone calls, the brochures, the radio, TV and newspaper advertising in the 2008 election cycle, chances are good that you won’t have to go cold-turkey in the 2010 election cycle.
Why? Well, for all the money spent on the just-completed campaigns, there’s already money on hand for the upcoming battles. In the House, where, remember, the election is just 22 months away, incumbents and their defeated general election foes have $1.9 million in the bank. In the Senate, where it’s just 46 months to the next general election day, incumbents and their just-vanquished challengers have $1.5 million on hand.
Jan. 22, 2009
Some better than none?
If you figure that the best money the state receives is money that people voluntarily hand it, well, you gotta figure that it’s time for some repairs to the state’s gambling law.
Remember two years ago when it was passed, everyone thought that we’d have four brand spanking new, glitzy casinos abuilding by now?
There were likely, then, we thought, to be at least three combination horse/dog tracks with hundreds of adjoining slot machines?
The concept was that those enterprises would spin out hundreds of millions of dollars for the state—all from people who gladly ponied up their money for a chance to win big.
Well, it’s all gone south, and legislators are now considering either reworking the state gambling law or maybe just repealing it—mostly.
Mostly, because the only real gaming effort in the state now is the construction of a casino in historic Dodge City, an out-of-the-way little casino that is going to be popular and undoubtedly profitable, but on a smaller scale than mega casinos considered for Wyandotte, Crawford/Cherokee and Sumner counties.
Here’s the real trick: in a slow economy, if the state wants to get revenue fast, it has to come from slots at tracks, so-called “racinos.”
The tracks are there, but they’re shut down because racing alone won’t support the enterprises. Slots? That would be the key, but the state’s share of the take from those slots at tracks is 40 percent, and the canny owners of the tracks have penciled it out and they can’t make any money with that large a state take-out of the profits.
So, you just renegotiate that 40 percent? Figure that maybe 25 percent of something is better than 40 percent of nothing?Well, it’s rarely that simple in the Statehouse.
Remember that the casino/racino bill passed by just two votes, and remember that many of those same legislators are back in the Capitol now, and nobody’s sure if the narrow issue of reducing the state’s take from racinos would pass or fail… But, everyone is sure that any bill dealing with the racinos has the possibility of seeing the whole gaming enterprise being repealed.
That’s a big risk for those who like racinos, and it’s a big opportunity for those who don’t want the state to have any fingerprints on any sort of gambling.
Will the current budget crunch lead some gaming opponents to hold their noses and vote yes for lower, but at least some, revenues? Or, would it be a forum for some to pontificate that in these economic times, people shouldn’t be gambling away their money for food or their children’s shoes?
This might be one of those smaller issues that lawmakers could consider while the bigger and ultimately vital scraps continue over the state’s budget and deficit.
Will it happen?
Nobody knows for sure…yet.
Jan. 15, 2009
(Syndicated to Kansas newspapers Jan. 12, 2009)The other money
As the Kansas Legislature gets into motion this week, the talk nearly all will be about the state of the State General Fund and the current problems: flailing for air this year and sinking under water next year.
That’s all serious stuff and it is likely to send some legislators wondering about the “other” money in the state, the money that doesn’t wind up in the SGF, which is the multipurpose pool of mostly tax receipts that is the most-watched index of the state’s financial activity.
Practically, the SGF that everyone is worrying about represents about 36 percent of all money that is flowing through the state treasury.
Now, how does that happen? Well, there’s SGF money and then there’s all funds money. While last year the SGF totaled $5.7 billion, the “all funds” number, including the SGF, was a dab over $16 billion.
What’s the difference?
It’s complicated, of course, because that’s what tends to happen in the Statehouse. But over the years, agencies that wanted programs—and some are good and some are so technical it’s hard to tell whether they’re good—needed money for those programs.
Some money is in the form of fees you pay, say, when you file a lawsuit or make an application for permission to drill an oil well or something else that requires a fee. Most of that fee money goes to the agencies that perform the service, and while they’re state agencies with state employees operating out of state buildings, those fees don’t show up in the general fund. They wind up in “all funds.”
And, once a program gets its own special fees and taxes and receipts, the business of that agency can continue without a lot of legislative oversight.
It’s out-of-sight, out-of-mind and while it’s real money, lawmakers generally don’t know about it, what it’s used for and whether it is being used for something that they believe the state needs to do.
Now, much of it is federal money, sent down to states to do something that the federal government says is important, like the environment, water quality, building roads, managing health agencies and such.
Lawmakers generally don’t have the time or the inclination to look at that off-budget stuff because they’re concerned about the State General Fund. That’s the focus, and the all-funds projects tend to be out on the periphery where they’re not examined.
So, while legislators and the governor are trying to make the State General Fund balance again, the biggest portion of money that rolls through the treasury continues to roll.
Is there money to avert sharp cuts in state programs or, alternatively, raising taxes to get through the next couple years? Maybe, maybe not, but until the all-funds cash flow is examined, there’s not a good way to know.
And you know what they say about things you don’t know…
Jan. 8, 2009
(Distributed to Kansas newspapers Jan. 5, 2009)Fixes or solutions?
You are now in the week-before-the-week that the Legislature starts its 2009 session, and the session promises to be a test.
The budget is the key issue; the state is spending more money than it is likely to take in and that has to be fixed.
It’s a crisis—dollar-wise—bigger than the state has faced in recent memory.
There are two simple fixes—not solutions, mind you—but fixes that are possible. One is to raise taxes on everything in sight. Another is to cut spending sharply to make the revenues and expenditures line up. We’re talking maybe $800 million in tax increases, or $800 million in spending cuts, or some blend of the two equaling, not surprisingly, about $800 million.
But, those are just fixes—not solutions.
And, there’s a fair chance that Kansans are looking for solutions next session.
Remember a few weeks ago when Rom Emmanuel, the chief of staff to President-Elect Barack Obama, said something about a crisis being too good to waste? Now, strip away the knee-jerk reaction that Emmanuel was somehow making light of the nation’s economic crisis, and stop posturing about insensitivity to the plight of the poor, the children, the sick, the short, the balding, and Emmanuel made some sense.
Gov. Kathleen Sebelius, at a pre-legislative session interview with Hawver’s Capitol Report, seemed to agree with Emmanuel.
“I think there’s no question that a budget crunch is an opportunity, and really a mandate, to look at everything. And maybe make some tough decisions that we wouldn’t make…There’s inertia about good times; why rock the boat, why make anyone mad,” she said.
That’s probably what a lot of Kansans are looking for—tough and new decisions from the governor, the leaders of the Legislature, the old hands at lawmaking and the new boys and girls coming in.
Now, it came up fairly quickly, this budget crisis. When legislators went home last spring, the budget was pretty stout but revenues were coming in, and it appeared that some fairly routine belt-tightening this session would suffice.
It won’t, we now know.
The first week, starting with the governor’s State of the State address and budget submissions to cut spending in the current fiscal year and to figure out how to avert a deficit next year—and the Legislature’s reaction to that message—ought to pretty well determine whether we’re in for fixes or solutions.
It’s devilishly complicated, and intensely political.
Because at some point, the governor and the Legislature need to look at what the state does and whether it is doing what it needs to do and whether it is doing things that it doesn’t need to do. That seems simple.
But every dollar that the state spends on anything goes somewhere, and the people and institutions receiving that money don’t want it to go away.
That’s where the opportunity comes in. The crisis is here; everyone knows that.
The real test is going to be whether the governor and Legislature can actually cause changes and take the political heat for it. A governor not seeking reelection may be able to withstand the heat. And legislators who want to ascend to higher office might be willing to take some heat if they believe they can show Kansans that they’ve solved something instead of just fixing it.
But…remember President John F. Kennedy’s book “Profiles in Courage”? Chances are good that if Kennedy had written about Kansas government, he might have produced…a pamphlet.
Big session coming up. Big problems. Anyone looking for real solutions or will you settle for fixes?
Jan. 1, 2009
(Distributed to Kansas newspapers Dec. 29, 2008)
The politics of budget cutting
OK, get ready for it, because the real issue that is going to mesmerize the Kansas Legislature in the upcoming session is the state budget—or rather, budget cuts.
That’s Job No. 1 for Gov. Kathleen Sebelius, and it’s Job No. 1 for the Legislature.
First, let’s get some numbers that you’ve been reading and hearing straightened out.
The Consensus Revenue Estimating Group, comprised of fiscal wizards who, well, estimate future revenues into the State General Fund, predicts that revenues will fall at least $211 million before the fiscal year ends on June 30, 2009. What that means is that spending approved by last year’s Legislature is about $140 million more than Kansas is likely to have (the state had been looking forward to ending this fiscal year with a small balance).
For the year that starts July 1, expected spending—just keeping commitments that the state has made to schools and human services, and generally keeping government running—is about $800 million more than the state is likely to have next fiscal year. You’ve been reading in the press a figure of a $1 billion shortfall for next fiscal year, but that actually includes the deficit expected for the current fiscal year, which by law can’t carry over to the next fiscal year.
OK, now, let’s get to the political nitty-gritty.
Sebelius has promised to cut spending in the current, half-over, fiscal year by what looks to be about $190 million—leaving the state, if the estimators are right, and they won’t be, about $50 million in the checking account.
She’s going to have that regimen of cuts ready for legislative action shortly after Jan. 12, when the Legislature convenes. That’s a baby step, an ugly one, but a baby step, and both she and the Legislature need to get that done quickly. It shows she’s serious about keeping the state solvent, and it gives the new Legislature something to brag about…stepping in quickly and taking decisive and painful action to save the state from bankruptcy.
Here’s the political good part, if we can call it that. Sebelius has to meet the figures produced by the revenue estimators back on Nov. 4, and revenues have gotten worse since then. But the Nov. 4 estimate, legally, is the target she is required to meet.
It probably means that the Legislature is going to have to cut more spending this fiscal year, but Sebelius gets to make the least-icky of the cuts. And the political focus will be on the Legislature’s additional cuts to get through this fiscal year. Yes, this is about the state budget, but politics looms over everything done in the Statehouse, which you know if you are drinking coffee-or-better and not baby formula as you read this.
Key is how long the Legislature fusses with the current fiscal year fix. Presume it is fixed. Then the $1 billion shortfall for the next fiscal year you’ve been hearing about shrinks to maybe $800 million.
Now, that’s sizable, about 15 percent of the State General Fund.
But, again, the governor gets the first swing at that pitch, and even though the cuts will be uglier, she gets to propose the least-ugly of the cuts for her budget for next year. She’s required by law to meet the estimated figures that were given her in November. That’s likely to be less than is actually necessary, but she again gets first pick at a smaller target.
The additional cuts that lawmakers are going to have to propose to balance the budget as it stands on the last day of the upcoming fiscal year? That is where the political spotlight is going to be in the upcoming session.
And that political spotlight? Well, Sebelius is going to be out of work in 2010, and maybe looking for a political job in Kansas then. There will be legislators who are wondering whether they’d like to be governor, and watching their step to make sure that they don’t alienate large voter blocks. And there are going to be legislators who just want another term and will have to defend their votes on budget cuts in 2010, too.
Makes it interesting to watch, doesn’t it?