Kansas starts $700m in the red, but prospects good


July 6, 2010 - 12:00 AM

Kansas started a new state budget year on July 1, $700 million in the red.
It was necessary to issue a certificate of indebtedness for the $700 million because tax collection shortfalls left the treasury empty when last year’s fiscal year closed on June 30 and bills had to be paid. To comply with the cash basis law, which requires the state to balance its budget every year, more than $140 million in accounts payable was pushed forward into the 2011 fiscal year — meaning that they must be paid now.
Because tax collections are slow in the summer months, the $700 million will be spent paying last year’s postponed bills and keeping current with salary and other continuing expenses.
Still another concern is that the 2011 budget assumes that the federal government will pay Kansas $131 million above its previously contracted share of the state’s Medicaid costs. Those additional payments are provided for in a federal stimulus program which has yet to be renewed.
If Congress balks, as it has on the extension of unemployment benefits, new reductions in state spending will be required.
The patches of sunlight in this gloomy picture come from continuing signs that the economy is recovering and the additional revenue now flowing into the treasury from the penny increase in the sales tax passed by this year’s Legislature to provide funds for education, transportation and aid to the developmentally handicapped.
While unemployment in Kansas is still between 6 and 7 percent, that is a full two and a half points below the national level. Iola, for example, has full employment. Employers here are seeking workers. It is true, as it always is, that some have not found the job he or she considers ideal and that there are job-seekers who do not, for whatever set of reasons, meet the requirements of those seeking additional workers. But there are open jobs seeking workers in Iola and that’s healthy.
Iola’s economy is strong. Its industries are thriving. It is a contributor to the Kansas economy; a giver, not a taker. And our sound condition should be taken as a positive indicator for the rest of the state. There is light shining down the road a bit.

— Emerson Lynn, jr.

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