Kan. Gov Sebelius seeks deeper budget cuts

TOPEKA, Kan. - Kansas Gov. Kathleen Sebelius has directed state agencies to step up efforts to trim their current budgets to help head off a looming deficit, but two legislative leaders questioned Wednesday whether it's enough.

A new financial forecast projects that the state will have a budget deficit of $137 million in June 2009. That forecast also says that if the problem isn't addressed, the shortfall could grow to nearly $1 billion by June 2010.

The state is prohibited by its constitution from running a budget deficit, so Sebelius and the GOP-controlled Legislature will have to make adjustments. But legislators aren't scheduled to reconvene until January.

Sebelius had asked agencies to trim current budgets by 2 percent, and during a news conference Wednesday said that she has increased the figure to 3 percent. She had agencies to make recommendations for trimming their spending by an additional 5 percent after July 2009 and suggested the reductions may need to be even higher.

She is still hoping to protect aid to public schools and some social services, and her latest directive would save state government about $60 million. But that's less than half of what's needed to eliminate the projected deficit in the current budget.

The Democratic governor also said she sees little support for increasing taxes, something legislative leaders from both parties also have said. But she stopped just short of declaring that higher taxes are not an option.

Sebelius said agencies already have started to freeze hiring and stopped buying equipment. She said she hopes to avoid laying off state employees.

"I haven't taken anything off the table between now and January," she said. "I'm going to continue to pursue a wide variety of options, some of which may have to wait until the Legislature returns."

Sebelius made her comments less than an hour after Senate Majority Leader Derek Schmidt, an Independence Republican, said she should pursue deeper cuts in the current budget than she previously had sought from state agencies.

After her comments, he was disappointed that she wasn't even more aggressive.

"At least the governor's creeping in the right direction," he said. "This is not a nominal problem. This is a major budget decline that's going to require serious action, and I think probably being a bit bolder would be very helpful at this point."

And House Speaker Melvin Neufeld, an Ingalls Republican, said it would take an across-the-board cut of more than 2 percent in the current budget, including education and social services, to prevent a deficit.

"If you exclude too much, 3 percent is not enough," he said.

However, Neufeld acknowledged that withholding some of the state's promised $3.2 billion in aid to public schools during the current fiscal year would be difficult because schools already are locked into contracts with teachers.

But, he said, protecting education and other areas of the budget will require deep cuts elsewhere and, "You're going to have to do some restructuring in government."

The new forecast from state officials and university economists is far more pessimistic than the one Sebelius and legislators used in drafting the current budget earlier this year. They could be forced to rethink the promises they have made in recent years on spending for public schools, higher education and social services.

The forecasters slashed $211 million, or 3.5 percent, from the previous estimate for the state's general revenues during the current fiscal year. The old estimate was $6.02 billion, and the new one is less than $5.78 billion.

They also said revenues would remain flat at $5.78 billion for fiscal year 2010, which begins in July.

Sebelius acknowledged that what she has asked of state agencies so far "doesn't get us to a balanced budget." But she said it represents only her first reaction to the new forecast.

"We are confident that there are some additional steps," she said.

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