HEADLINES : Kansas
State senators propose adding rainy-day fund to constitution
TOPEKA - Save money during good times to prepare for a rainy day. It may not be groundbreaking economics, but some state senators want that idea added to the Kansas constitution to protect against future budget shortfalls.
The constitutional revision would create a rainy-day fund, or a contingency reserve, that state legislators could access only when projected state revenue dips below the previous year's income.
"The rainy-day fund is basically there to ensure that the next economic downturn we have, we are not at a point where we have to make such drastic decisions as we made at the time," said Sen. Carolyn McGinn, R-Sedgwick, who is sponsoring the bill and chairs the Ways and Means Committee, which is considering it.
The proposed amendment could face a tough battle this year, coming at odds with proposals to use surplus revenue to cut taxes.
Under the proposal, the state would be required to deposit up to 1 percent of its budget into the account when the state has a year-end balance of 3 percent or more. When the account reaches 15 percent of the previous year's tax revenue, the state would not be required to continue to make deposits.
In lean times, the state would be allow to draw only enough money to equal the year's projected budget shortfall. For example in 2011, it could have taken a contingency reserve of $493 million to offset the year's projected budget shortfall.