(Syndicated to Kansas newspapers June 16, 2014)
The Kansas Legislature last week got good news—from some perspectives—that it pumped enough money into two specific funds for public schools to be off the hook from a potentially earth-shaking decision by a three-judge panel considering school finance.
The two funds were state support for capital outlays made by school districts and chipping in equally the state assistance for school districts that have local option budgets. It took about $130 million of new and shuffled funds to accomplish the equalization that the Kansas Supreme Court wanted.
Whew… The earth-shaking alternative was for the court to shut down the entire capital outlay and local option budget programs, which would have cost school districts about $1 billion in lost revenue. Imagine the problems that would have caused.
But…while lawyers for the state were seeking a decision to close the file on those funds, the three-judge panel instead told the state it had done good work…but the funding issue will remain open. School district lawyers reminded the court that the Legislature tends to make a deal, and once the deal is sealed, tends to ignore it.
So, the court essentially said, nice job; but we’re keeping an eye on you…
Why the fuss when it appears that the hot issue of the session was largely settled? It’s because this week, the State Finance Council, made up of the governor and top legislative leaders, will borrow money from state accounts to get through the fiscal year that starts July 1. Typically in November and February, there isn’t enough cash on hand to make payments to vendors and state agencies to pay their bills. And that’s what the borrowing is supposed to be about, the government equivalent of a pay-day loan.
But if the state’s cash flow and projected ending balance—remember you have to repay those pay-day loans—drops to below $100 million, or even less than zero, the governor has to make budget cuts all by himself.
It’s either across-the-board cuts, which sound rather uneventful, an even-handed trimming, or agency- and program-specific cuts.
Those across-the board cuts sound relatively harmless. What’s a 1 percent or 2 percent cut…just a trim, and it can be handled with one press release.
But, if the court is going to keep an eye on that $130 million to meet the cost of equalizing that capital outlay and local option budget assistance, it probably isn’t going to be happy to see the bargain already being chipped away at with an across-the-board spending cut (which by some obscure old law prohibits school district capital outlay cuts but is OK with cutting local option budget support).
So, depending on how fussy the court is—and we recall that the Legislature littered the court’s budget for next year with some internal political language that the boys and girls in black robes didn’t like—that across-the-board business may be out of the equation.
Which means the governor may well have to make individual agency cuts, pitting department against department, program against program, and producing a bumper crop of political issues on whom the governor likes best during this election year.
So, while the Legislature skirted one problem, it just may have lined up a bunch of other political problems that mean either first-week of the 2015 session budget cutting or tax increasing or some combination of the two.
The Legislature and the governor got the good news on meeting the school finance requirements, but that move just may have been accompanied with an asterisk so big that it shadows that victory.
Makes for an interesting summer coming up.