By Gene Meyer and Rachel Whitten
March 5, 2010

(KansasReporter) TOPEKA, Kan. - Kansas Gov. Mark Parkinson on Friday pulled the plug on $87 million in planned state highway maintenance projects to help balance Kansas' deteriorating state budget by June 30 and beyond.

The cancellations, of projects scheduled for letting this year, is projected to save the state $28 million in the current year, or just more than a fourth of what's needed to fill a projected $106 million revenue gap. Favorable seaonal flows of state income tax collections, some Medicaid changes in Washington and a potential new Kansas seat belt law that both trigger more federal help and $27 million in unexpected savings in unused agency funds round out the remainder of the expected needs, Parkinson said.

Adminstrative cuts, transfers and adjustments will net at least $52 million, legislative approval will be required for another $54 million, which includes savings from the cancelled highway projects, a primary seat belt law that will qualify Kansas for $10 million in new federal funds, a one-quarter moratorium on $12 million in payments to a Kansas Public Employees Retirement System death and disability benefits fund, and some legislation codifying regulatory treatment of Medicaid HMOs.

Looking ahead to the fiscal 2011 budget, which will be the focus of numerous legislative hearings next week, the governor called on legislators to look into the abolition of myriad tax exemptions or other sources such as higher tobacco and alcohol taxes for additional revenue.

"We cannot balance the next budget or protect our schools, public safety or safety net services without new revenue," he said.

While an unprecedented four-year consecutive drop in state revenues is the immediate reason Parkinson and state legislators are mulling what will be their sixth modification of the current budget, the governor, a Democrat, also accused Republican-led legislators of fundamentally eroding Kansas' tax base in the long run.

The Legislature, Parkinson told a Capitol news conference, "has been on a tax cutting binge for the last 20 years that has decimated our revenue raising process."

Average Kansas taxpayers have received little benefit from tax cuts such as the elimination of estate and property taxes or the reduction in state wide millage rates for property taxes, the governor said. Special interest groups favored by legislators have.

"The Tea Partiers are right," Parkinson said. "They have been left out. No one is standing up for them. But they are mad at the wrong people," he said. "

"I respectfully disagree with Gov. Parkinson's statements blaming Kansas' business friendly policies for the state's deficit,"  said House Speaker Mike O'Neal, a Hutchinson Republican.

"Kansas has a spending problem, not a revenue problem," O'Neal said.

Kansas state fund general expenditures were on a six-year track headed more than 24 percent higher, to a projected $5.83 billion in 2011 from $4.69 billion in 2005, according to Kansas Division of Budget figures compiled by the Kansas Policy Institute, the parent organization of KansasReporter. Spending from all sources climbed nearly 28 percent, to $13.73 billion from $10.59 billion.

And before recession hit, the tax policies Parkinson criticized Friday were producing a healthy 5 percent annual growth rate, said House Speaker Pro Tem Arlen Siegfried, an Olathe Republican.

Kansas, which historically goes into recession later than other states also has tended raise taxes in those recessions and to come out of them later than other states, Siegfried said.

"We need to resist the temptation to raise taxes in order to exit from the recession more quickly," Siegfried said.

Mining Kansas' current web of tax credits, tax refund programs and sales tax exemptions that cost taxpayers what the Kansas Legislative Division of Post Audit calculates is upwards of $4.2 billion probably won't benefit average taxpayers nearly as much as the governor indicated Friday, legislative auditors found in two reports released last month.

The auditors found that 53 percent of the state's tax credit or refund money in the programs they reviewed goes to taxpayers, often in border communities, to offset income and other taxes paid to other states. Earned-income tax credits, food sales tax refunds and homestead property tax refunds, all designed to help elderly or low income tax payers are next biggest at 19 percent.

And among Kansas' 13 biggest categories of tax exemptions, some $3.4 billion of the exemptions involve purchases made during manufacturing, which are excluded so that they aren't tacked on to the prices consumers or end users pay.