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Kansas tax refunds, state paychecks in limbo over budget dispute
By DAVID KLEPPER
The Star’s Topeka correspondent
TOPEKA | Kansas tax refunds, employee paychecks and money for schools are all on hold after a showdown erupted Monday between Republican legislative leaders and Democratic Gov. Kathleen Sebelius.
The game of political chicken places state taxpayers, workers and schoolchildren squarely in the middle of a politically charged battle over massive budget cuts.
Republicans, who hold majorities in both chambers of the Legislature, blocked Sebelius’ proposal to borrow $225 million from healthy state funds to cover shortages in accounts used to meet the state’s payroll and issue tax refunds.
GOP leaders said they wouldn’t approve the IOUs until Sebelius either cut the budget herself or signed the budget bill they passed last week. It would slash $326 million — including $32 million for education — to balance the budget.
Republican leaders said they had no choice, that by law the state couldn’t borrow any more money from itself. Sebelius and Democrats disagree, accusing the GOP of playing politics with people’s paychecks.
“This is blackmail at its worst, coercion at its best,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat. “It’s about as irresponsible an act as I have seen.”
“We have to make absolutely sure that we’re doing everything that needs to be done to protect the state’s financial stability,” said Senate President Steve Morris, a Hugoton Republican. “We’re in a precarious situation — we know that — but we do not want to make that situation worse by doing what is against statutes.”
Kansas’ cash-flow problem stems from the worsening recession and lower-than-expected tax revenues. As a result, the state had only $10 million in its checking account Monday morning.
To make up the shortfall, Sebelius proposed borrowing from other healthy state funds. Such loans — called certificates of indebtedness — are routinely used when the state runs short on cash. State leaders already had authorized $550 million in certificates this fiscal year.
But this time, Republican legislative leaders balked.
“Until Senate Bill 23 (the budget-cut bill) is signed into law … certificates of indebtedness are not in order and cannot be authorized,” said House Speaker Mike O’Neal, a Hutchinson Republican. “We fully expect these bills will be paid, but we expect them to be paid in a lawful manner.”
Sebelius hasn’t said whether she’ll sign the budget-cut bill, though she has indicated she will veto cuts to schools if she thinks they go too far.
Sebelius said it was wrong to force her hand on the budget-reduction bill before she had time to review it.
“Through their refusal to act today, the Republican legislative leadership is jeopardizing our citizens’ pocketbooks for no other reason than to play political games,” Sebelius said in a news release. “Games in which the only ones set to lose are Kansas families, workers and schools.”
Washburn University political science professor Bob Beatty likened the impasse to the 1995 federal budget battle between President Bill Clinton, a Democrat, and House Speaker Newt Gingrich, a Republican. That dispute prompted a partial government shutdown.
Beatty said Kansas legislative leaders were making a dangerous gamble.
“Gingrich went too far,” he said. “If you go too far, you lose.”
Until the stalemate is resolved, taxpayers expecting refunds will have to wait. Already, some $12 million in refunds have been delayed.
I'm not familiar with Kansas laws so I can't say if this is truly illegal as the Republicans claim or if it's obstructionist grandstanding.
Leaving politics aside, there still aren't enough details for me to form an opinion on whether this is a wise move. We don't know which of the state's funds are being raided to meet current needs, nor do we know the balances & projected cashflows & revenues for those funds. If they're borrowing from the DHS comfy sofas and building checkpoints in a cornfield fund, well, no big loss, but if they're getting loans against the education or unemployment fund then that could be a pretty serious problem.
