Parkinson's 2 percent cuts criticized for not being enough

The action taken by Gov. Mark Parkinson Thursday to zero out a $152 million shortfall in the fiscal 2009 budget could lead to a tax increase in the fall if the state's economy does not improve.

Parkinson cut funding 2 percent to K-12 education ($39 million) and higher education ($15 million), did nothing with disabilities and the prison system, cut 2 percent from other state departments and packaged nearly $70 million in revenue enhancements with increases in federal funding to cancel out the shortfall. In addition, Parkinson restored $8 million to Court Services, which was cut during the 2009 legislative session by mistake.

House Appropriations Committee Chair Kevin Yoder, R-Overland Park, said although he appreciates Parkinson taking action, he is concerned the governor did not go far enough and the result could be further cuts or even a tax increase later in the year.

During a conference call with legislative leaders Thursday morning, Yoder asked Parkinson if he was prepared to make additional cuts if there is another shortfall in revenue this fall.

"He said he is willing to make additional reductions but that it would depend on how big the shortfall is," Yoder said. "That if (the shortfall) got too big, he would need legislative assistance."

The governor has the authority to target and make budget cuts as necessary without legislative approval. Legislative approval is needed to raise taxes and that would mean calling for a special session.

"That's one way to interpret that," Yoder said. "We appreciate what Gov. Parkinson did today and for stepping up and taking a leadership role, but we are concerned we are slicing this too thin and not providing enough of an ending balance that will protect us from having to make these types of cuts a number of times.

"He's taking another gamble. What do you do if you're a school superintendent? We're good (financially) to the end of June, but we don't know at the end of July if we're going to have another shortfall. And if we're off another $30 or $40 million, now we have another problem."

Yoder said that is why he, and others, have urged the governor to make deeper cuts now to bring about a more stabilized and consistent budget.

"Even though it would create additional pain today, it would give us some better guarantee that what we're telling our school districts is accurate," he said. "I'm concerned that school districts still can't accurately budget even after (Parkinson's announcement) today."

And when school begins, and if another large shortfall forces the governor to call for a special session, the pressure will be to increase taxes rather to make budget cuts, Yoder said.

"It's hard to fire a teacher in the middle of October," Yoder said. "By not making the necessary cuts now so school districts can tighten their budgets, one of the fears is that if there is another huge shortfall in the fall the pressure to raise taxes is going to be much greater.

"If we have to make up 2, 3, 4 percent additional cuts in the fall on top of the 2 percent the governor did today, I would assume the school districts would be very vigilant in their opposition to making cuts in the middle of the school year; where are the kids going to go and what are the parents going to say?"

This reduction will mean about $2 million in cuts for the Olathe School District, Superintendent Patricia All said. The district has cut $8.7 million from the 2009-10 budget through a hiring freeze and staff reductions through attrition.

"It is just unfortunate that the state of Kansas continues to have these financial problems that are directly impacting the school districts and it's really out of our control," All said. "These kinds of reductions and the fact that they continue are of serious, serious concern to the programs and services and to the school district going forward."

With the beginning of the year fast approaching, the district may look at a combination of more reductions, raising taxes and spending money from reserves, she said.

"I would rather know now than six months from now," All said. "...I think that is my great fear now that it is going to put us in a very challenging situation that is going to require looking at programs and services."

Representatives of the Blue Valley and Shawnee Mission districts could not be reached because the districts were closed Thursday for the July Fourth holiday weekend.

Several of the things Parkinson announced must be approved by the Legislature when it goes into session next January, such as borrowing $30 million from the highway fund as part of the $70 million in revenue transfers and restoring funding to Court Services.

"To make many of those changes effective the governor announced today will require us to pass legislation when we go back into session in January," Yoder said. "And if we don't, then the budget goes back to the hole it's in today."

Lost in the budget debacle is the fact that the Kansas Constitution requires the state to have a 7.5 percent budget reserve. In the last year, the state has been fortunate to zero out its budget.

Parkinson has asked school districts and other departments and agencies funded by the state to create their own budget reserves.

"The reason there is a 7.5 percent ending balance is because revenue fluctuates throughout the year and you don't want to be in the middle of the year making revenue adjustments to schools every few months as revenue fluctuates," Yoder said. "On $6 billion spending, the reserve would be like $400 million.

"So if we had a $400 million cushion right now it would be a lot easier. The fact we're back to a zero dollar cushion, that's our concern. He's encouraging school districts and state agencies, and I agree, to build reserve accounts in case further cuts have to be made.

"Essentially, he's asking them to do what we can't do."

Sun staff writer Kristin Babcock contributed to this report.

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