Originally published February 16, 2009 at 01:33p.m., updated February 16, 2009 at 04:46p.m.

Kansas suspends income tax refunds

By Scott Rothschild

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State suspends payments

Kansas has suspended income tax refunds and may miss payroll this week as a partisan battle erupted Monday in the Statehouse over how to address the problem.

Kansas has suspended income tax refunds and may miss payroll this week as a partisan battle erupted Monday in the Statehouse over how to address the problem.

Republican legislative leaders demanded that Gov. Kathleen Sebelius cut the budget before they would agree to inter-governmental loans to fund state employee paychecks, as well as numerous other state payments.

But Democrats said the Republicans, who hold significant majorities in the Legislature, were trying to blackmail Sebelius, a Democrat, by threatening to shut down government.

Reader poll

Have you filed your 2008 Kansas income tax return?

  • Yes, and I am expecting a refund 36% 38 votes
  • Yes, and I owe the state money 11% 12 votes
  • No, but I anticipate a refund 33% 35 votes
  • No, because I will owe the state money 16% 17 votes
  • I'm not required to file a state return 1% 2 votes

104 total votes.

"This is a helluva way to run a railroad," Senate Democratic Leader Anthony Hensley of Topeka said. "It is blackmail at its worst, maybe coercion at its best," he said.

Republicans, however, said they were following state law concerning when the state can move money around for cash-flow purposes.

In response to Hensley's charge of blackmail, House Speaker Mike O'Neal, R-Hutchinson, said, "Nothing could be further from the truth."

The dispute came right before a meeting of the State Finance Council, which is led by Sebelius and includes legislative leaders.

Sebelius was going to request the council approve $225 million in certificates of indebtedness to handle cash-flow problems.

Sebelius' budget director Duane Goossen said because of cash-flow problems the state may be in jeopardy of not making payments this week for payroll, school finance, Medicaid and income tax refunds.

The state on Friday had to delay income tax refunds because of a lack of funds in the state general fund, he said.

But before the meeting, O'Neal and Senate President Steve Morris, R-Hugoton, went to Sebelius' office to tell her they would not agree to the certificates.

Hear from Republican leaders at the Statehouse.

They said that under state law, the certificates can only be issued if it can be certified there will be enough funds at the end of the fiscal year to cover them. According to a memo from the Kansas Department of Legislative Research, it doesn't appear that would be the case, the Republicans said.

O'Neal and Morris said Sebelius could satisfy the requirements by signing the budget recission bill, making executive authority cuts or both.

Asked how the governor reacted to their message, O'Neal said, "It was not very cordial."

State Treasurer's response

"The Budget Director's recommendation to transfer money to the state general fund was not about spending or about the budget bill. This was about ensuring that the state can continue to pay its bills until our account balances improve with tax returns in April.

"By failing to act on the recommendation of the state budget director to shore up balances in the general fund, legislative leaders put our reputation as a reliable bill payer and our credit rating at risk.

"This is taking a budget fight one step too far. Through inaction legislative leaders have put in jeopardy the state's ability to make payments for payroll, public schools, health care and income tax refunds.

"The budget director has no partisan agenda in today's proposal to bolster the state's general fund balance. If the State Finance Council had approved his initial recommendation in December, we would not be in the situation we are in today."

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Comments

dano (anonymous) says...

so since i have to pay state taxes.....does that mean that i can just "suspend" my payment to whenever i feel like it.

February 16, 2009 at 2:30 p.m. ( | suggest removal )

barbiecakes (anonymous) says...

OH my does that mean the govenor should have her pay suspended also......how about evicting her from her home since she "isnt paying for it" We have to make cuts LETS start at the TOP! Im sure the gas electric and water bill is expensive she might find homes in the low income housing!

February 16, 2009 at 2:47 p.m. ( | suggest removal )

OpinionOnly (anonymous) says...

Send the legislature home and have them send their votes in for the year. Stop the renovations of the capital, that will save a lot of money. There are obvious things that can be done in lieu of postponing state employees checks or furloughing state employees. IF the furloughs do fly, will this effect the legislature too? AND please DO NOT tell me they vote themselves yet another raise this year. Seems that every year they throw in a little sentence at the bottom of a bill that passes and lo and behold they get another raise. Why should the state workers make up where projected money fell through? By the way barbiecakes, seems that the governor is trying to move money to make up the difference so at least she is trying. If the state of KS employees paychecks are delayed, then medicaid and SRS "free" money needs to stop as well. That is my opinion.

February 16, 2009 at 3:21 p.m. ( | suggest removal )

drewrkennedy (anonymous) says...

Isn't the state budget required by LAW to be balanced? Shouldn't someone face some sort of criminal charges for this sort of thing(breaking the law). If I speed or don't pay my taxes on time I get whacked with fines and penalties. If they offered a bond or something I could understand. But if they keep my money how can I spend it to help the economy or pay my employees?

I want some accountability.

February 16, 2009 at 4 p.m. ( | suggest removal )

drewrkennedy (anonymous) says...

OpinionOnly,

Do you think the state would feel any regret penalizing you if you "tried" to pay your taxes but were unable to do so?

February 16, 2009 at 4:08 p.m. ( | suggest removal )

situveux1 (anonymous) says...

Finally, I am so sick and tired of Sebelius trying to borrow her way through this crisis. Cut some spending for pete sake!

February 16, 2009 at 5:11 p.m. ( | suggest removal )

lydiasaintjohn (anonymous) says...

The use of these certificates has been approved every year for the last decade to help pay bills (like said paychecks). The Republicans are saying that they will not approve the certificates till the Gov signs a bill that has not even made it to her desk yet. This is a political game the Republican leaders are playing, and the only ones loosing out are the families of Kansas. I hope that the republicans will reap what they are sowing with this blackmail scheme, for that is exactly what it is; pass what we have yet to send you without reading it first or else no money for payroll, can have no other description. The Gov is doing all she can to get the cash to pay bills, it is the republicans who seem to be balking.

February 16, 2009 at 5:14 p.m. ( | suggest removal )

blondie (anonymous) says...

Why is it the state can "suspend" making payments to the taxpayers because of budgeting problems, but the taxpayer doesn't have the same right? If I told the state I was having budgeting problems and didn't have the money to pay them I wouldn't be given the option of "suspending" payment until it was convenient for me. What a bunch of hypocrites!

February 16, 2009 at 6:16 p.m. ( | suggest removal )

WorkingGirl (anonymous) says...

This is not a Republican thing or a Democrat thing. This is a political thing and both parties are equally guilty of raping the American working people.

Not only has our economy tanked, but so has the economy of most of the rest of the world because of greed on the part of the politicians. If they had to work as hard for their money as the rest of us, we wouldn't be having the problems we are having now.

Our hard earned dollars are taxed right out of our pockets and given to other countries, illegal "immigrants", girlfriends and God knows who else.

Meanwhile, the politicians continue to give themselves raises, exempt themselves from the laws they burdon the rest of us with and insulate themselves from the sewer they put the rest of us in.

It's time for the American worker to revolt. Give us liberty or give us death.

February 16, 2009 at 6:56 p.m. ( | suggest removal )

situveux1 (anonymous) says...

http://kansasliberty.com/liberty-upda...

The real story:

Gov. Kathleen Sebelius is demanding the Kansas Legislature join with her in violating state law to use the budget crisis to score political points, top House Republicans told Kansas Liberty Monday.

"The Legislature doesn't have the luxury of operating outside the law," said House Speaker Mike O'Neal. "Kansas for years has had on the books procedures a governor can follow in times like these, but she's refused to exercise those options, to the detriment of the state. She's better than that. It just seems she's going out of her way to make people upset with the Legislature."

The latest budget drama began Monday when Sebelius called a meeting of the State Finance Council to seek authority for a $225 million certificate of indebtedness to cover a cash flow crisis.

That meeting ultimately was postponed, Republican legislative leaders said, when they made clear to Sebelius that the Legislature couldn't authorize additional debt.

O'Neal and House Majority Leader Ray Merrick, in conversations with Kansas Liberty, cited an analysis by Legislative Research Director Alan Conroy that concludes such an action would be illegal because the state wouldn't be able to cover the certificate by the end of the current fiscal year, on June 30, as required by state statute KSA 75-3725(a).

However, the Sebelius administration contended Monday that approval of an additional certificate of indebtedness would not be contrary to state law.

"Legally we are ready to go," said State Budget Director Duane Goossen at a hastily called press conference late Monday.

Goossen had created a spreadsheet that he said described how the certificate of indebtedness could be repaid, and that all that was needed was authorization by the State Finance Council.

Goossen said he was hopeful that state employees would get their paychecks Friday, but that he was uncertain whether the state could meet that fundamental obligation without additional debt authority. He indicated that the state had about $10 million in the bank, and that $23 million would be needed to pay state employees Friday.

Merrick said the Sebelius' administration's "sky is falling" scenario of state employees not getting paid, tax refunds being delayed and schools getting temporarily stiffed on scheduled state payments was merely political posturing to cover her inaction on the state's budget crisis.

"There are other options available to her that she's refused to exercise," he said. "She's known for months that we had a heck of a problem, and she's done nothing to address it."

February 16, 2009 at 9 p.m. ( | suggest removal )

situveux1 (anonymous) says...

(con't)

Merrick pointed out that the $225 million would have brought to $775 million the amount of certificates issued in the current fiscal year, "the most," he said, "in Kansas history." Conroy, in a written response to a query from O'Neal, expanded on Merrick's comment:

"The Governor has requested that the State Finance Council issue another, or third, Certificate of Indebtedness in the amount of $225 million, for a total of $775 million in the current fiscal year. By previous State Finance Council action (June 27, 2008) a Certificate of Indebtedness of $300 million was issued for the beginning of FY 2009 and another Certificate of $250 million was issued on December 16, 2008. With the issuances of all three Certificates combined, it is at $775 million, the largest total issued amount of Certificates of Indebtedness in Kansas history. The previous largest amount was $550 million that was issued earlier in FY 2009. This will be the first time that three Certificates were in place at the same time."

Merrick said Sebelius was attempting to cast the Legislature in the role of blackmailer.

"She's trying to make it sound like we've got a gun to her head to try to force her to sign Senate Bill 23 [the so-called rescission budget]," Merrick said. "The fact is no one has said she has to sign Senate Bill 23."

Rather, he said, the Legislature wants her to at least signal that sufficient cuts contained in the bill will be enacted so the Legislature is assured that it will be able to cover the certificates to comply with state law.

"We'll have the bill on her desk within 24 to 48 hours and she can take a look, and then we can reconvene before the end of the week," Merrick said.

Some in the Kansas media have suggested if the Legislature were to comply with Sebelius' demand for more debt authority, it would represent a simple technical violation of state law.

O'Neal, a lawyer, disagreed. "It sounds more fundamental than technical to me."

O'Neal said he was disappointed, but not particularly surprised, that Sebelius and her political allies would attempt to blame Republican legislative leaders for a budget impasse that he said is solely of her making.

Other Republicans said Sebelius was counting on a friendly state media to headline some of the more volatile claims - including not paying state workers or not issuing tax refunds - to mask the more complex issues in play. Sen. Ty Masterson, an Andover Republican, told Kansas Liberty, "Sebelius is counting on a sympathetic media to sway public opinion her direction."

The Associated Press and most newspapers covering the story on Monday led with the no-tax-returns story.

Senate Democratic Leader Anthony Hensley, in a statement distributed late Monday, attempted to liken Kansas Republican leaders to former Speaker of the U.S. House Newt Gingrich, a favorite whipping boy of Democrats.

February 16, 2009 at 9:01 p.m. ( | suggest removal )

situveux1 (anonymous) says...

(con't)

"Without a certificate," Hensley said, "the State of Kansas will be unable to meet its obligations to make payroll for thousands of state employees, to pay refunds to income taxpayers, and to provide Medicaid assistance to countless disabled and elderly Kansans. To put the livelihood, health and welfare of Kansas citizens at stake just to win political points is inexcusable."

O'Neal responded: "It's typical of Sebelius apologists to ignore facts and embrace fantasy to make her look good," he said.

He also invited state employees who are worried they might not get their paychecks to contact the governor's office and the Department of Administration.

"They're capable of making payroll if they choose to do it," O'Neal said.

February 16, 2009 at 9:01 p.m. ( | suggest removal )

WTF (anonymous) says...

Surprised? Not me. The old gal we elected as governor made a campaign promise to hold everyone in the state government body accountable for their actions. Has anyone noticed any accountability? Not me. That was the first of many lies by our TAX DOLLAR PAID leader(?). Now everyone should know why she canceled meetings the other day. Once again a proven fact, it is easy to tell when a politician is telling a lie... because their mouth (I hope it is their mouth) is uttering sounds. It is unnecessary to make fun of and/or call any politician(s) names, because they prove what they are by their actions, a bunch hypocritical two faced worthless overpaid lying waste of tax dollars idiotic morons who do not care about anyone but themselves, as is and has been proven by their actions. The biggest problem with government is, it is not ran by the majority that pay taxes, the poor folks of this country. All those in office have no idea about what they are making decisions for or about, because they are more concerned with their own pockets/agenda. I have a great idea of a way to save the state DOT at least half their budgeted cost on road repairs. Just repair the lanes of all roads that exit the state...

February 17, 2009 at 8:34 a.m. ( | suggest removal )