As the Kansas Legislature works to balance the budget for the upcoming fiscal year, even fiscal conservatives are recognizing the dire straits they have foisted upon themselves — and, by extension, the citizenry.
One of the concerns the Senate Ways and Means Committee expressed this week was how few options lawmakers have to close a for-now $175 million deficit.
“We have no rainy day fund, we have no ending balance and this is the closest thing we have to getting us some working capital that we need,” said Sen. Jim Denning, R-Overland Park.
Guess what the “this” is in Denning’s remarks? Suspending the state’s portion of contributions to the Kansas Public Employees Retirement System.
That’s correct. KPERS, already the fifth worst funded state pension plan in the nation. KPERS, which last year lawmakers agreed to Gov. Sam Brownback’s plan to borrow $1 billion and invest in global markets in hopes of shoring up an almost $10 billion underfunding. KPERS, which the state already has committed resources to discovering fraud among the retirees it pays.
That’s part of the plan to fix next year’s budget. Not make its required KPERS payment, and promise to pay it back during the next 24 months at an 8-percent interest rate.
According to the Topeka Capital-Journal, the provision raised a few eyebrows. Sen. Laura Kelly, D-Topeka, questioned whether that future Legislature really would have to pay it back.
“To the extent anything in statute is a guarantee, yes, it would be guaranteed,” said the committee’s chairman, Sen. Ty Masterson, R-Andover.
Sen. Jeff Melcher, R-Leawood, asked: “What would lead us to believe our financial situation will be somewhat different when it comes time to repay this?”
That led Denning to declare that even if this proposal “smells” like a loan, it is not.
We don’t know how lawmakers keep straight faces while uttering such nonsense. They’ll likely blame some other factor when the credit-rating agencies issue further downgrades.
We will know better. Taking a high-interest payday loan and referring to it as capital is nowhere to be found in a fiscal conservative’s playbook. Still, it was close enough for the Senate budget panel. The latest KPERS accounting gimmick was included in the overall package the committee sent to the floor, 9-2.
Editorial by Patrick Lowry