Kansas to Pay Down Debt With Surplus

DALLAS — Kansas will save $5.4 million by using part of a $466 million surplus from fiscal 2012 to make early payments on $24.7 million of state debt, Gov. Sam Brownback said Wednesday.

The debt includes $11 million that financed rehabilitation and repair at the Kansas State Fair in Hutchinson, with final maturities in October 2021; $9.9 million for a parking garage at the capitol complex in Topeka also set to mature in October 2021; and $2 million for restoration projects at the Kansas Capitol due in October 2012.

Brownback said with more than $1.1 billion of outstanding state general fund debt, the state will pay off its bonds whenever feasible.

“We want to continue to do that,” he said at the news conference called to review state finances. “We’ve amassed too much debt.”

Kansas’ state debt is rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s.

Some political candidates in the state from both parties are contending that a cut in the state income tax rate would create revenue shortfalls by fiscal 2014, but Brownback said he called the news conference to dispute those claims.

The revised tax code will result in more economic activity in the state, he said, and generate additional, unexpected revenues.

“An expanding economy and growing population will directly benefit our schools and local governments,” Brownback said.

The 2012 Legislature cut the top individual income tax rate to 4.9% from the current 6.45% on Jan. 1, 2013.

The measure eliminated the income tax liability of almost 200,000 small businesses.

“We’re building up our cash reserves,” Brownback said. “We’re in excellent fiscal position right now.”

Kansas had a surplus of $876.05 million at the end of fiscal 2010, he said, but ended fiscal 2011 with a surplus of $188 million.

Fiscal 2013 is expected to result in a surplus of $470 million.

A three-year, 1% increase in the sales tax rate that brings in $300 million a year should be extended past its scheduled demise on July 1, 2013, Brownback said.

The governor supported a failed attempt to make permanent the tax rate in the recent legislative session.

The tax is set to fall to 5.7% from 6.3%, with 0.4% dedicated to statewide transportation projects.

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