Kansas Budget Crisis Puts Bond Rating At Risk

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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