Fund would force state saving

Two state lawmakers want to force Kansas to save money for tough times.

Establishing a rainy day fund through a constitutional amendment would help lawmakers "protect ourselves from ourselves," said Sen. Laura Kelly, who announced the plan Tuesday with Sen. John Vratil.

Kelly, D-Topeka, and Vratil, R-Leawood, laid out plans for creating the fund, which they hope will go out for a public vote this year.

Here is how the fund would work:

In years when revenues increase by more than 3 percent, the state would be required to set aside the next 1 percent in a budget stabilization fund. For example, if revenues increased by 5 percent, 1 percent would be set aside, and 4 percent would remain available to lawmakers. If revenues increased by 3.5 percent, one-half of a percent would be set aside in the rainy day fund.
Once the fund reached 7.5 percent of the state's general fund budget, lawmakers wouldn't have to set aside any additional money.
Lawmakers could dip into the funds following any year in which revenues declined — unless the decline was caused by a tax cut. Dipping into the fund would take a simple majority vote.

Already, lawmakers are supposed to have 7.5 percent in carry-over funds each year, but that has been largely ignored by both parties, Vratil said.

"I don't give much credence to the 7.5 percent statutory requirement," he said. "It's kind of a joke."

The senators said lawmakers would be forced to comply with a requirement in the state constitution. Currently, 7.5 percent of the budget would amount to $465.7 million.

Kansas is in the middle of a third year of declining revenues with little relief in site. Lawmakers are facing a shortfall of about $350 million as they create next year's budget, and that comes after about $1 billion in cuts. The state is out of reserves to draw upon.

"Many of those tough decisions and many of those draconian cuts that we have had to make could have been avoided should the state have set aside funds years ago," Kelly said.

Since 1991, the state has had 14 years in which revenues climbed more than 3 percent. Certainly, Kelly said, the rainy day fund could shape future spending and taxing decisions.

"There's always a trade-off to have that little wiggle room versus no wiggle room now," she said. "We've had no flexibility. We've just had to cut, cut, cut, cut, cut."

For the state's constitution to be amended, the measure would have to pass the House and Senate with two-thirds support. Then it would go to a public vote.

"I commend these two senators for bold thinking with an eye to the future," said Gov. Mark Parkinson. "Senators Kelly and Vratil have looked at the mistakes of the past and found lessons to be learned."

Barbara Hollingsworth can be reached at (785) 233-7470 or barbara.hollingsworth@cjonline.com and tweets at twitter.com/CapJ_Barb.