KS Center for Economic Growth Blog on Senate Bill 463

High Danger Alert: SB 463

By Kansas Center for Economic Growth Senior Fellow Duane Goossen

Watch out! A very dangerous financial bill just surfaced in the Senate Ways and Means Committee, but it was promoted with language that hid the ultimate purpose and effect.

Senate Bill 463 permanently transfers more than $500 million annually from the highway fund to the general fund. The bill also abolishes the Kansas Endowment for Youth Fund (KEY), the Children's Initiative Fund (CIF), and the Economic Development Initiatives Fund (EDIF), placing all revenue that those funds now receive into the general fund.

The general fund is broke. Income tax revenue was cut so sharply in 2012 that recurring revenue does not begin to cover expenses, even though school funding has been converted to a block grant and many other spending cuts have been implemented, and even after sales tax rates were raised. Lawmakers have already used up general fund reserves. Kansas has no rainy day fund. The current budget barely survives by grabbing large one-time transfers from other funds.

In that situation, what happens in future fiscal years when highway money and children's money routes into the general fund? It all gets sucked up! It all gets put in service of paying off income tax cuts.

• Money designated for bridge repair and highway maintenance-gone.

• Funding dedicated for early childhood programs, Parents as Teachers, and family preservation-gone.

• Revenue set aside for economic development programs-gone.

 

Plus, this bill opens up the possibility of selling the KEY Fund revenue stream by repealing all of the statutes that promise this funding to children. Administration officials have been considering selling-pawning-the revenue stream for cents on the dollar, to obtain a one-time payment that would be yet another short-term plug for the budget crisis.

Proponents of SB 463 tried very hard to sound convincing. They claimed this bill was not something anyone needed to worry about, that the bill would not affect appropriations, but you better believe that it will.

The bill's fiscal note only vaguely outlines what may happen in the future, but includes this phrase about highways:  "it is likely that the scope of the T-WORKS Program would need to be reexamined." What an understatement! SB 463 permanently damages the highway plan, along with children's programs and economic development initiatives.

The bill is a set-up. Vote for this one lawmakers, and you have permanently raided the highway fund, sold off children's programs, and tied your hands on economic development. The governor's people say, "oh no, it doesn't do that," but if this passes, then next year and the year after that, you are going to find out that the fate of Kansas roads and early education programs was sealed with this bill.

This maneuver does not fix the problem caused by unaffordable income tax cuts, it just makes highways and children pay for it.