The ongoing Kansas Budget battle has brought in numerous contenders to the fight - conservative Republicans who have avowed no taxes; conservatives who are dedicated to govern even if their are consequences, the Governor who has weighed in with a veto threat.
Peter Hancock of the Lawrence Journal World chased down a story yesterday that points to a change in direction in the way the legislator discusses their revenue problem.
http://www2.ljworld.com/...
Topeka — Some Kansas lawmakers are now openly saying that the continuing impasse over how to balance the state budget could have a negative effect on the state's bond rating.
In particular, they are worried about the $1 billion in pension obligation bonds the state hopes to issue to help shore up the troubled Kansas Public Employees Pension System.
"It’s a deal-breaker if you don’t have a structural balance to your budget," said Rep. Steven Johnson, R-Assaria, who chairs the House Committee on Pensions, Investments and Benefits.
Simply put: without a revenue bill, the state suddenly risks a situation where not only is the state credit rating harmed, but the authority to issue bonds to fill budget areas goes away.
This could create a problem of a budget hole a billion dollars larger than the current projected shortfall.
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As statehouse reporters have gathered and discussed the political machinations that surround the decisions, the running storyline from the statehouse has been whether or not they could get a budget. More recently, the story has been whether or not Gov. Sam Brownback will simply force a deadlock and move to allotments in order to balance the budget - a constitutional requirement.
With the concerns of bondholders, however are quickly putting Kansas credit at risk - meaning the 400B shortfall could become a $1.4B shortfall, and then a nearly unreachable shortfall as Kansas bonds become unattractive for outside investors.
http://www2.ljworld.com/...
But Sen. Jim Denning, R-Overland Park, vice chair of the Senate Ways and Means Committee, said he thinks it would result in another downgrade of the state's bond rating. At best, that could push the total cost over the 5 percent limit, and at worst it could make investors unwilling to buy the bonds, Denning said.
Despite talk of Governor action through allotment, it appears the only way to stabilize and secure Kansas bonds will be to establish a revenue package which satisfies the state holding requirements.
Now legislators must be concerned not only with the governor, potential furloughs, significant cuts in agencies due to allotments -- they also must be aware that inaction, and the ability to produce a revenue package that will pass both houses will provide the trigger that could tank the Kansas bond market.