- Associated Press - Thursday, May 1, 2014

TOPEKA, Kan. (AP) - Legislative negotiators struck a deal Thursday on the Kansas budget, shaking off a dismal revenue report and a downgrading of the state’s bond rating by a leading investment service to push forward with a bonus for state workers.

Three House and three Senate members finished work on the remaining items, including adding $11 million to give nearly 38,000 state employees a one-time, $250 bonus. The budget agreement also would preserve guaranteed longevity bonuses for employees with at least 10 years in state government, which both chambers previously had considered eliminating.

Other items include more than $360 million for the Department of Corrections for 2015 and 14 more corrections officers at the Topeka Correctional Facility. Both chambers took procedural votes Thursday afternoon that cleared the way for an up-or-down vote Friday in each chamber.

Once legislators approve the budget legislation and send it to Republican Gov. Sam Brownback, they can adjourn for the year, except for a short, formal ceremony in a few weeks.

The budget agreement came less than a day after the state Department of Revenue reported that tax collections for the month totaled $92 million less than expected. Republican Gov. Sam Brownback and other GOP officials cited changes in the federal tax code on capital gains and other income.

Also Wednesday, Moody’s Investor Services downgraded the state’s bond rating on concerns about long-term pension obligations and further reduction of state ending balances necessary to cover expenses. The service cut the Kansas rating from Aa1 to Aa2. Ratings are assigned to give an indication of risk associated with the investment.

Senate Ways and Means Committee Chairman Ty Masterson said the state is in fine shape because of healthy reserves that will carry over to the next fiscal year beginning July 1.

“It’s not really that much new spending,” said Masterson, an Andover Republican. “This year we have plenty of money in the bank.”

He said the bigger question was how much of a hit Kansas would take due to the federal changes.

Moody issued the downgrade citing the state’s slow economic recovery compared with other states, its reliance on one-time sources of revenues to balance the budget and the reduction in available revenue as a result of tax cuts enacted in 2012 and 2013.

Brownback spokeswoman Eileen Hawley said the administration realized that the public employee pension system was underfunded and has increased funding by $166 million from 2011 to 2015. She added that Moody’s did recognize the state’s fiscal best practices, a low unemployment rate at 4.9 percent and a history of maintaining ending balances.

“This (downgrade) points to the importance of growing our economy, creating jobs and controlling our spending,” Hawley said.

House Minority Leader Paul Davis, who is seeking the Democratic nomination for governor, issued a statement saying the tax cuts were hurting the ability of the Kansas economy to recover.

“The governor’s reckless policies have failed and the evidence continues to pile up,” said Davis, a Lawrence Democrat.

Davis’ campaign and legislative staff didn’t immediately respond to questions as to whether he would push to roll back the tax cuts or modify them if elected in November.

Masterson said the Moody’s action should have little effect on the state’s costs to issue bonds for projects because it was a relatively small adjustment.


AP Political Writer John Hanna contributed to this report.

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