Letter to Editor, Printed in Newton Kansan
House Democratic Leader Paul Davis
February 25, 2009
I am writing in response to an op-ed piece printed on Monday by Rep. Marc Rhoades, who serves the 72nd House District in Newton, entitled: "Governor invented finance crisis."
Simply put, Rep. Rhoades does not have the facts straight.
Similar to a normal household budget, the State General Fund endures financial peaks and valleys throughout the year. Some months we enjoy a "cushion" of revenue, while others are traditionally much tighter. This is the normal ebb and flow of the fiscal calendar, but it is exacerbated in years of economic hardship and can result in a serious cash flow problem for the state.
To address this, the state has the ability to shift money from one account to another by issuing certificates of indebtedness. This essentially allows the state to "borrow" money from itself for operational expenses (such as state payroll) until revenues recover, which is usually after folks file income taxes in April. A certificate of indebtedness is a common cash management tool that has been utilized 12 times in the last 9 years. The money has always been repaid to the proper account.
The State Finance Council was scheduled to meet on Monday of last week to take this routine course of action. Instead, the meeting had to be canceled because Republican leaders refused to approve the certificate until the Governor signed a budget bill- supported by Rep. Rhoades- that would have forced the Newton School District to cut over $350,000 from its budget by the end of June (Governor Sebelius line item vetoed this detrimental provision and instituted a less harmful reduction). The meeting was not, as asserted by Rep. Rhoades, postponed by the Governor. The Governor, along with other Democratic leaders, was ready to attend the meeting and issue the certificates necessary for the state to pay its bills. It was Republican leadership who refused to move forward, thereby putting state payroll in jeopardy.
We should never play politics with the paychecks of state employees. The Governor did not want to politicize this situation, she simply wanted to issue the certificate so the state could pay its bills. State Budget Director Duane Goossen (who has served under both Republican and Democratic governors) repeatedly conveyed that certificates of indebtedness have nothing to do with the revised FY 2009 budget bill. As long as the budget director can verify that the certificates will be paid (which he did), it is lawful to issue them. There is absolutely nothing illegal or "highly suspect" about this process, as suggested by Rep. Rhoades and members of Republican leadership. Furthermore, Rep. Rhoades' argument that the Governor failed to act on the budget shortfall before the session began is also far from the truth. On two separate occasions before the Legislature convened, the Governor ordered all state agencies to cut their budgets. She then presented a balanced budget to the Legislature for FY 2009 that would have satisfactorily filled the budget gap. The Legislature chose to ignore many of the Governor's recommendations and instead engaged in six weeks of infighting.
It takes $23 million to make the state payroll every other week. Had the certificates of indebtedness not finally been issued last Wednesday, it would have left the State General Fund $14 million short. There was nothing "invented" about this situation, and denying payroll to more than 40,000 employees absolutely qualifies as a crisis. Rep. Rhoades was correct when he said that last week's crisis was unnecessary, but the Governor took every possible action to both prevent the situation and move forward. Had Republican leaders taken action on Monday as originally scheduled, the entire debacle would have been avoided.
In the future, Rep. Rhoades may want to be more careful when pointing fingers, especially when the facts point straight to the leaders of his own party as the culprits of what he calls "financial shenanigans."
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