Kan. gov. likely to get OK for internal borrowing

Eds: RECASTS lede, UPDATES with additional background on borrowing, quotes from legislators, governor; ADDS byline, Internet note. Moving on general news and financial services.

By JOHN HANNA

Associated Press Writer

TOPEKA, Kan. (AP) -- Gov. Mark Parkinson appears unlikely to face much trouble persuading legislative leaders to allow a fresh round of internal borrowing so that Kansas can pay its bills on time in coming weeks.

That's in sharp contrast to his predecessor, whose confrontation with the same leaders in February created fears about state workers being paid late and briefly brought Kansas unwanted national attention.

Parkinson, a Democrat, gained some points with the Republican-controlled Legislature by imposing $160 million in adjustments, including cuts in education funding, in the budget for the fiscal year that began Wednesday. His action came after revenues slumped in the just-ended fiscal year and the state delayed payments to schools and tax refunds from June into July.

But Parkinson said $700 million in internal borrowing also is needed to pay those overdue bills and keep paying others on time. The money would be transferred from various funds around Kansas government into the state's main bank account and repaid by the end of June 2010.

Such borrowing requires the approval of the State Finance Council, which is the governor and eight top legislative leaders, most of them Republicans. The council is scheduled to meet Monday to discuss Parkinson's plan.

"I don't know that there's another alternative at this point," said House Appropriations Committee Chairman Kevin Yoder, an Overland Park Republican and council member. "I think all of us would like to avoid another showdown with the executive branch."

Parkinson said rejecting his request would require the state to postpone paying most of its bills, though the payroll wouldn't be in danger.

"I would be shocked if the legislators would make that decision," Parkinson said during the Thursday news conference at which he unveiled his budget adjustments.

But Parkinson's predecessor, Kathleen Sebelius, a fellow Democrat, met with some resistance to her plans for internal borrowing during the last fiscal year. GOP leaders eventually allowed $775 million worth, but in three installments.

Sebelius had ongoing disagreements with GOP leaders about the budget before she resigned in April to become U.S. health and human services secretary, elevating Parkinson from lieutenant governor to governor. Republicans frequently said she wasn't aggressive enough in pursuing cuts.

The Finance Council whittled down one round of internal borrowing in December 2008, and in February, GOP members temporarily blocked $225 million worth as budget-balancing legislation awaited Sebelius' signature. Republicans argued that without a balanced budget, the state couldn't guarantee repayment by the fiscal year, as required by Kansas law.

Sebelius' administration said the state might miss its payroll; she signed the budget legislation the next day, and GOP leaders relented. But they acknowledged they'd lost ground politically.

"That was good for nobody," Yoder said.

Senate Majority Leader Derek Schmidt, an Independence Republican, said he's still worried about so much internal borrowing but, because Parkinson moved to keep the budget balanced, he'll have an open mind about the governor's request.

House Speaker Mike O'Neal, a Hutchinson Republican, said he's less concerned about the amount of the borrowing than whether Parkinson's administration can guarantee that it will be repaid on time.

"If you're going to have to do it, you might as well do it all at once," added Senate President Steve Morris, a Hugoton Republican.

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On the Net:

Kansas governor: http://www.governor.ks.gov

Kansas Legislature: http://www.kslegislature.org