By Jonathan Shorman
November 25, 2016

The top Republican senator is urging GOP lawmakers to call on Gov. Sam Brownback to implement “necessary” spending cuts as the governor holds tight to his promise to wait until January to announce budget action.

In response, the governor’s office said Brownback’s budget proposal will make significant cuts unnecessary, but it didn’t provide specifics.

Senate President Susan Wagle, R-Wichita, warned the Senate GOP caucus in an email Friday that the governor may seek to address the $350 million budget shortfall with short-term fixes. She called on lawmakers to join her in telling Brownback the budget has a structural imbalance and voters want a structural fix.

“I ask that you join me in calling on the governor to lead and use this opportunity to implement necessary cuts this fiscal year,” Wagle wrote. “Trust me. There is talk of bullying the Legislature into another one time fix. We could be asked to buy a bottle of rubber cement and patch it with one-time funds found under a mattress, or we could be pushed into a short sale of future receipts from the tobacco settlement to make ends meet.”

Melika Willoughby, a spokeswoman for Brownback, said Friday the governor’s budget proposal won’t require “significant cuts.”

“Given all of the discussion around the state budget over the last several months and the Legislature’s desire to be more involved, the governor believes it is most appropriate to give them an opportunity to exercise their constitutional power of the purse,” Willoughby said. “It is interesting that legislators who campaigned on protecting core functions of government from spending cuts are now criticizing the governor for refusing to cut K-12, higher education, social services, and public safety.”

Senate Minority Leader Anthony Hensley, D-Topeka, chided Brownback for waiting. But he also said he wants to see if Wagle is interested in working with Democrats.

“Right now, I would say that it would be more important for the governor to provide some leadership and propose the cuts himself as opposed to putting it all on the Legislature,” Hensley said. “He is taking what I would consider the coward’s way out by not proposing cuts even before the session.”

Wagle’s email, first reported by The Wichita Eagle, raises the specter that the administration will pursue securitization of the tobacco settlement. Administration officials earlier this year discussed securitizing the tobacco settlement, but the talks were disclosed by Kansas Action for Children and were abandoned. Securitizing the funds would require legislative action.

Kansas receives millions each year as part of the master settlement agreement between states and major tobacco companies reached in the 1990s. The bulk of the funds are supposed to go toward children’s programs, but cash is regularly diverted to the general fund.

Securitizing the yearly payments would provide a one-time revenue payout — perhaps upward of $400 million. But payments in subsequent years would be greatly reduced. Annie McKay, CEO of Kansas Action for Children, has previously said she has every reason to believe securitization will be pushed by the Brownback administration in the coming session.

McKay said if the governor’splan involves defunding children’s programs by securitizing the Children’s Initiative Fund, he needs to come clean.

“Senator Wagle and other lawmakers are right,” McKay said. “The less time programs have in a fiscal year to make adjustments, the greater pain the cuts inflict. Governor Brownback has made nine rounds of budget cuts since his disastrous tax policy went into effect. Agencies were asked back in August to submit reduced budgets offering ample opportunity for the Governor to address the growing shortfall.”

McKay was referring to requests by State Budget Director Shawn Sullivan to agencies for plans for how they would deal with a 5 percent spending reduction. Sullivan later told the agencies the administration doesn’t plan on making 5 percent across-the-board cuts.

Wagle’s email included a memo from legislative researchers showing that in several past instances of shortfalls, governors took action separate from the Legislature to balance the budget. Wagle wrote that it is “extremely important” that tax-funded agencies have as much budget predictability as possible.

The longer agencies are forced to wait for budget certainty, the greater the impact cuts are to agencies, she wrote.

“When the 2017 Legislature convenes in January, with a large number of newly-elected Representatives and Senators, we will be faced with a massive deficit and a structurally imbalanced budget,” Wagle wrote. “One-time, short-term fixes do not address our structural imbalance and enacting allotments in January will be a daunting task.”

Wagle and Brownback have disagreed at times over the state budget. In the run-up to the November election, she embraced the potential repeal of tax breaks for the owners of limited liability companies. Brownback has been a steadfast proponent of the tax breaks, which he says help small business.

Opponents, however, argue not taxing business income flowing from LLCs drains cash from state coffers and is unfair. Business owners may not pay income tax while their secretaries pay personal income tax, they say.

Wagle’s email signals she is willing, even after the election, to pressure the second-term governor. She must also secure the support of her caucus to continue on as president. There’s been little talk of a challenger, however.

Read more from the Topeka Capital Journal.