Home Pay off Schmidt Urges Kansas Legislature To Pay Off KPERS Debt And Increase Rainy...

Schmidt Urges Kansas Legislature To Pay Off KPERS Debt And Increase Rainy Day Fund With Surplus Dollars

16
0

TOPEKA, Kansas (WIBW) – Kansas Attorney General Derek Schmidt urged the Kansas legislature to act with caution and pay off KPERS debt, as well as increase the state’s Rainy Day Fund with a dollar surplus observed at the end of 2021.

Kansas Attorney General Derek Schmidt said he had urged the legislature to act with caution in response to the expected large increases in state revenues.

“The state of Kansas has an unprecedented amount of money and plans to raise much more for several years to come. As lawmakers and the governor craft the new state budget, I strongly encourage a cautious approach, ”he said.

Schmidt said that while he was Senate Majority Leader, projections showed the money would go into state coffers for years to come – it doesn’t.

“The 2008 financial crisis came suddenly and everything changed quickly,” he said. “This led in 2009 and 2010 to painful budget cuts and broken promises in many important services and the largest sales tax increase in state history (despite my objection).”

“Let’s not do that anymore. Projected revenues sometimes never actually appear. So proceed with caution, ”he continued.

Schmidt said there was one more reason to be careful this time around. He said almost all states had booming revenues as a result of spending decisions made by Congress and the Biden administration in 2021. He said those states were spending money at a “breakneck rate.”

The point, Schmidt said, is that the Sunflower State has done very little to trigger the income boom and will be ill-equipped for a drop in income. He said current projections are not sustainable – what goes up must eventually come down.

“Kansas should responsibly prepare for that day now. Far better to proceed with caution knowing that if revenues continue to grow as expected, Kansas may consider other priorities in the years to come. A measured approach better than over-committing now and having to break promises in the future, ”Schmidt said.

Schmidt recommended that the state spend at least $ 1 billion in 2022 to pay down the public debt of the Kansas Public Employees Retirement System, which still owes $ 5 billion. He said it was a legal debt that must be paid in due course and that aggressive prepayment of at least $ 1 billion now will save taxpayers hundreds of millions of dollars in service. in debt – over $ 400 million over the next five years.

Schmidt said the move would benefit taxpayers and free up more than $ 70 million each year to help support public education, transportation and social services or make future tax relief possible. He said it would also bring the state’s public pension system to over 80% funded, which is an industry goal the state has long been working towards.

Second, Schmidt said the state should set a significant portion of the money aside in its rainy day fund to help protect vital services such as public education, transportation and social services during the downturn. next inevitable economic downturn.

“If Kansas had a rainy day fund when the economy bottomed out in 2008, some of the broken promises to Kansans who depend on state services – or perhaps the huge tax hike 2010 – would have been avoided or at least minimized, “he said.” The more the better, but setting aside at least $ 500 million for a rainy day seems possible and prudent. “

Schmidt said that even by taking the responsible actions mentioned above, other important state priorities can still be met with the funds currently available. For example, he said that it would still be possible to do the following:

  • Dramatically reduce or eliminate the sales tax on groceries. It may also be possible to reverse the overall increase in the sales tax rate remaining in 2010.
  • Protect the state’s long-term investment in transport and permanently close the “KDOT Bank” by ending transfers from the transport fund.
  • Maintain a sufficient end-of-account balance in the general state fund to avoid cash flow problems.

Schmidt said these measures would still leave room for the legislature to responsibly support many other core priorities important to Kansans, such as mental health, education, public safety and disaster relief in the areas. damaged by the December forest fires.

Copyright 2022 WIBW. All rights reserved.