State Treasurer Ken Miller said Monday a recent downgrade of the bond rating for Kansas should “serve as a wake-up call for us here.”
He said Oklahoma is on a more responsible fiscal track than Kansas, but some of the reasons Moody’s Investors Service slightly reduced the Kansas rating sound “eerily familiar” compared with practices or proposals in the Sooner State.
One of the reasons for the Kansas downgrade was using money from one-time revenue to cover operating expenses. There have been suggestions to tap Oklahoma’s Rainy Day Fund to help balance the state’s budget.
Another reason involved revenue reductions resulting from tax cuts. Oklahoma Gov. Mary Fallin has approved legislation to slightly reduce the state’s income tax rate in the future if state revenues increase.
Finally, an underfunded retirement system in Kansas figured into the rating reduction there. Oklahoma also has an underfunded retirement system.
Bond ratings are used to determine how much it costs a state to borrow money. A lower rating increases interest rates.
Miller said Kansas is enacting conservative ideology.
“But they are not being fiscally conservative, because fiscally conservative is paying your bills,” Miller said.
“I think our tax cuts have been much more responsible than Kansas,” he said. “They are facing a much lower receipt of income taxes than they thought that they would.
“That’s one of the reasons for the downgrade, but it’s also their plan, and Governor (Sam) Brownback continues to say that he wants to eliminate the income tax. And it’s not just the loss of the income tax that’s the problem — if they have other sources of revenue that made up for it. But like here, that is their major income stream.”
State economy grows
Miller’s comments came as he released a monthly economic report that showed gross receipts to the state treasury indicate the state’s economy remains on an expansionary course.
Monthly collections of $1.32 billion exceed last April’s receipts by 3.3 percent.
He said the state’s 4.9 percent March unemployment rate also shows the strength of the state’s economy. The comparable national rate was 6.7 percent.