New Gov. Kathleen Sebelius (D) inherited a cash-starved state when she took the reigns from departing Gov. Bill Graves (R) this past January. But she also inherited a bit of fiscal expertise from the departing governor when she decided to keep his budget guru, Duane Goossen, in charge of state budget matters.
Spanning Republican and Democratic administrations, Goossen has seen Kansas lawmakers raise taxes, drain reserve funds and cut programs deeply in an effort to balance the state's books. In an interview last Thursday (May 29) at a Harvard University conference on state and federal relations, Goossen commented on Kansas' budget situation and what the federal government can do to help.
STATELINE.ORG: What is the current status of Kansas' budget?
GOOSSEN: We're balanced. . . .That hasn't been easy. We've come through several years of pretty heavy-duty budget cuts. The state raised taxes last year under Graves. This year we did not. The legislature made several moves that you might call one-time things or sidesteps that include payment delays and accelerations of revenues. Those help us one-time to get us out of the situation.
STATELINE.ORG: You said you've come through some tough years of cuts. How does Kansas state government look different today than it did two years ago?
GOOSSEN: I'll give you several examples. What is normally referred to here as revenue sharing to local governments we have completely cut off. For Kansas, it's about $100 million that we would normally pass through to cities and counties. That's about 2.5 percent of our general fund budget that we are cutting completely.
STATELINE.ORG: How have local governments responded?
GOOSSEN: At first, a number of them filed lawsuits, or together filed a lawsuit, questioning whether we could even do it. That has since been rendered moot. The legislature essentially agreed with the governor's action. . . .For local governments that's meant cutting some services themselves and in some cases retooling or maybe even raising some property taxes. That depends on the local government and how easy they were able to absorb it.
STATELINE.ORG: Beyond the revenue sharing, what other areas have been affected?
GOOSSEN: We were in the middle of a ten-year comprehensive transportation plan where we were trying to funnel state general fund money to highways. That has been put on hold. The highway program has not been put on hold, but the transfer of general fund money to highways has been put on hold. We're using other monies, but that may have implications for the program.
And we've also gone through our reserves. . . .We've cut state agencies, the average state agency over two years probably 10 percent. Big-ticket items: We quit pushing general fund money to highways, we cut off local governments, and we have run through our reserves and we raised taxes.
STATELINE.ORG: Where would you be without that tax increase?
GOOSSEN: We had a record short legislative session. With a couple of sidesteps we've been able to balance and move forward. That's not to say our budget is pretty or that everybody likes everything that has occurred. But we are balanced and we do have a budget and a plan to go forward with. If we hadn't had a tax increase, the session, I don't think, could have gone in that short a time. Education hasn't increased. We have all these cuts. I don't want to sugarcoat it, because we've certainly come through cuts and we've gone through our reserves. But positively we do have a plan going forward that works.
STATELINE.ORG: Do you feel you might be setting yourself up for a very tough year next year by delaying some payments and speeding up some revenue collections?
GOOSSEN: We're clearly going to have a tough year next year. The sidesteps and one-time things we did this year didn't hurt us, they don't make it worse for the future, but they don't resolve longer-term structural things either. But they do buy some time to continue to try to help us run as efficiently as we possibly can and let the economy improve.
STATELINE.ORG: Beyond sending more money, what is one thing the federal government could do to ease the pressure on Kansas' budget?
GOOSSEN: The fiscal stimulus package they passed is a helpful thing to us. It doesn't -- I think someone used the term bailout -- there's no bailout with that. But it's certainly very helpful. It doesn't come close to covering the things that we've had to do to get to the point where I can tell you we've balanced next year. The tax increases, the reserves, the cuts -- all those things combined are much greater than what the federal government is sending us in this financial package.
Probably the best thing they could do for us is help us with our Medicaid rates. . .that's a program that continues to grow at a dramatically fast pace. To have them provide a greater share of that is enormously helpful.
STATELINE.ORG: Would you prefer a greater share or more flexibility?
GOOSSEN: I think a greater share. Certainly we wouldn't turn down more flexibility. But we've been through a lot of debate: Are there ways that the program could be run more efficiently? It's very difficult to think about cutting off services. We've had to cut some services in the past year. And we've cut some of them deep enough that we've in fact come back and restored some of them. . . .Ultimately to really hold the costs there it comes down to who will be eligible and who won't? Will you provide the services or won't you? Simply a greater federal commitment on that part is probably the most helpful thing to us.
STATELINE.ORG: Within Medicaid, what's one area you cut and then restored?
GOOSSEN: We froze access to home and community-based services and now have tried to loosen up again and let more people into the program. We have seniors, physically disabled people and developmentally disabled people. All those three programs, for seniors and physically disabled and developmentally disabled have waiting lists. For a time we just simply froze access because we didn't have the money to continue those. Now we've tried to add money back to at least lower the waiting list level.
Other ways the federal government could help connected with this federal bailout package. The federal government made tax cuts that because we're tied to the federal tax system actually hurt us.
STATELINE.ORG: Have you figured out whether it's a net gain or loss for Kansas?
GOOSSEN: The whole thing is a net gain. But clearly, any kind of tax cut proposals not hurting us more is a key thing. And finding ways we can get our share of the Internet sales tax is important. Our governor has been talking about that as a fairness issue for some time.