Web posted
Wednesday, January 16, 2008
Governor's budget taps gambling revenues
By JOHN HANNA
Associated Press Writer
TOPEKA -- Before the first coin drops into a slot machine, Gov. Kathleen Sebelius is relying on new gambling revenues to make her budget work.
She outlined a proposed budget Tuesday that includes more than $81 million in revenues from casino operators and slot machines at dog and horse tracks. Sebelius also proposed tapping the state's rainy day funds, a practice that has become common in recent years.
That combination allowed Sebelius to recommend new spending on early childhood and higher education programs, pay raises for state workers and bigger pensions for government retirees. She also proposed keeping past commitments to highway projects and increasing aid to public schools.
She and her budget staff believe the state will receive its first gambling revenues, from slot machines at race tracks, later this year. But Budget Director Duane Goossen acknowledged the administration assumes the law allowing the new gambling will withstand a pending court challenge.
Sebelius proposes to increase total spending about 3.6 percent, to nearly $13.6 billion for the 2009 fiscal year, which begins July 1. A majority of the $471 million in new spending would go to education, social services, and state employee raises.
''We're recommending a lean budget,'' Goossen said during a briefing for reporters. ''It keeps the commitments that have been made and also targets money to some key investments.''
Some Republican legislators were skeptical that the gambling dollars will flow to the state as quickly as the Democratic governor anticipates.
The new gambling law permits casinos in four counties and slots at racetracks in Kansas City and Frontenac, in Crawford County. The Kansas Lottery will own the new gambling but hire developers to build and manage the new operations. Some critics question whether the arrangement is allowed under the Kansas Constitution.
Attorney General Paul Morrison filed a ''friendly'' lawsuit to settle the issue, and a Shawnee County district judge could rule later this month. The final decision is likely to be made by the Kansas Supreme Court.
''We shouldn't be counting on that money,'' said Sen. Phil Journey, a Haysville Republican and attorney who opposed the new gambling law. ''When the money doesn't come, then all of a sudden the whole budget becomes very problematic.''
The law requires developers to pay fees for the right to place each slot machine at a race track and to build and operate a casino.
Sebelius' budget anticipates that the state will receive $4.4 million in fees before July 1 from the developers who install slots at the tracks, and $30.5 million in fees after that from casino developers. The state expects licenses to be granted for Ford County and either, Cherokee, Sumner or Wyandotte County sometime in fiscal 2009.
Her budget also assumes that slots at the tracks will generate an additional $47 million in profits for the state between now and July 1, 2009.
Some of the money would be set aside for construction and maintenance projects. But Sebelius would use more than $57 million to pay off bonds for existing highway and construction projects, including the ongoing renovation of the Statehouse.
That frees up revenues so that the state can dedicate them to other uses.
''I don't want to have the state in a position where we have expenditures that have to happen, like bond payments, based upon a source of funding that may not be there,'' said House Speaker Melvin Neufeld, an Ingalls Republican.
The use of the state's rainy day funds also is crucial to Sebelius' budget. The state expects to begin fiscal year 2009 with about $536 million in its treasury, and such balances serve as a cushion against bad economic times.
But Sebelius wants to spend $218 million of those reserves -- about 41 percent -- to finance new spending, so that the balance at the end of fiscal 2009 would be less than $318 million.
Sebelius proposed a 2.5 percent pay increase for state employees, but she also endorsed a plan drafted by a commission to overhaul the civil service system. The goal of that plan is to make sure that state workers' salaries mirror what's paid by private industry. Those proposals add $71 million to the budget.
She also wants to increase pensions for retired government workers by 1 percent during fiscal year 2009, at a cost of $6.4 million.
The governor also set aside nearly $168 million for additional aid to public schools, to fulfill promises made by legislators in previous years. That's about $45 million more than legislators thought their promises would cost, but the state had underestimated the cost of special education programs.
Her budget includes $23 million for early childhood education programs, something Sebelius described in her State of the State address Monday night as vital to keeping children from falling behind in school.
House Republican leaders have set a goal of limiting the overall increase in spending financed by general tax revenues to 5 percent. The state expects to collect about $6.2 billion in such revenues during fiscal 2009, with the rest of the budget financed by federal funds and dedicated fees, such as university tuition.
On the Net:
Governor's budget proposal: www.budget.ks.gov/gbr.htm
Kansas Legislature: www.kslegislature.org
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