March 18, 2016
A range of public policy organizations endorsed Friday formation by the Kansas Legislature of a rainy-day fund to cushion state government from fluctuations of tax revenue in response to economic shifts.
The budget stabilization fund would be created by July 1, 2017, under the House bill, and the savings account would be drawn upon by action of the Legislature for the State Finance Council, which includes top leaders of the House and Senate, as well as the governor.
The measure heard by the House Appropriations Committee didn’t specify how money would be dedicated to the fund.
Annie McKay, executive director of the Kansas Center for Economic Growth, was among advocates of the legislation. However, she said, the state’s revenue problems and budget deficits would make it unlikely such a fund could be created promptly.
“It is simply not realistic, given the fiscal crisis we are facing, to divert state revenue to a rainy-day fund before we address the ongoing structural imbalance with our budget and achieve the statutorily required ending balance,” McKay said.
The Kansas Chamber United for Business and the Pew Charitable Trusts also expressed backing for a special reserve fund.
Stephen Bailey, a senior associate for Pew Charitable Trusts, said Kansas should join 46 other states that established an emergency account.
“Just as families create rules for how and when to use their savings account versus their checking account, a rainy-day fund will allow Kansas to be clear, in law, about the purpose and objectives you’re trying to achieve through saving,” Bailey said.
Rep. Henry Helgerson, D-Wichita, said development of a fixed savings system for Kansas government would shield programs and agencies popular with Republicans and Democrats from budget cuts during economic downturns.
“You don’t go immediately in and start slashing programs for the needy. You have some cushion,” he said. “The other side of it is, with the conservatives or the republicans, you don’t want to put the state in a situation where you have to raise taxes.”
Read more from the Topeka Capital Journal here.