Brownback eyes gambling funds for Kansas debt

TOPEKA, Kan. (AP) — With two new state-owned casinos opening for business, Gov. Sam Brownback wants to use almost $70 million from the state's share of gambling revenues to retire outstanding debt.

The bonds were issued in recent years to finance state projects, including a new Statehouse parking garage, cabins at state parks and improvements to the Kansas Judicial Center.

Budget Director Steve Anderson said the policy decision was in response to growing concern among some legislators that debt was being ignored or not retired as quickly as it could.

"We think it's probably more appropriate to pay debt with this," Anderson said.

Kansas has more than $4.2 billion in outstanding debt, including $1.2 billion in bonds backed by general state revenues. Payment on that debt from all sources is about $385 million in the current budget.

The largest amount of state debt has been issued by the Kansas Department of Transportation to finance road and bridge projects since 1989. Those bonds are repaid through dedicated motor fuels taxes and other fees.

Two casinos authorized by a 2007 gambling law are open, with a third casino scheduled to open in February. The three facilities generate more than $365 million in revenue, of which $80 million goes to the state, $10 million goes to local governments and $7.3 million goes to problem gambling programs. Casino managers in Dodge City, Mulvane and Kansas City, Kan., will earn an estimated $267 million.

The $56 million bonds paid off early include those for improvements to the Kansas State Fair in Hutchinson and infrastructure for public broadcasting. The rest of the money will be used to replace other tax sources in making interest payments on the debt.

"We looked at all the callable debt that made sense, the state fair and public broadcasting," Anderson said. "We paid that debt off."

Brownback's budget assumes that Kansas will collect $39.3 million in gambling revenue in the current fiscal year and $80.5 million in fiscal year 2013, which begins July 1.

"To reduce the burden we leave to our children and grandchildren, we should use this increased revenue for its most important statutory purpose, to pay down our debt," Brownback said Wednesday in his State of the State address.

According to a ranking by Moody's Investor Service, Kansas debt backed by taxes equaled 2.85 percent of the state's gross domestic product in 2011, up from 2.62 percent in 2010. That ranked 20th in the country, with the median ratio of 3.94 percent.

The governor wants to use $1.7 million this budget year to make improvements at a shuttered Department of Corrections camp in Labette County, which would then reopen in 2013. The camp, which will employ 55 people and house 262 inmates, needs additional security improvements to its fencing, lighting, detection system and razor wire.

Remaining funds will be earmarked for debt.

Alan Conroy, director of the Legislative Research Department, said most of the outstanding, non-transportation debt was for ongoing Statehouse renovations and a one-time $500 million boost for the Kansas Public Employee Retirement System in 2004. Additional bonds have been, or soon will be, issued to cover the state's share of construction of the National Bio- and Agro-Defense Facility being built in Manhattan.

Kansas has agreed to more than $100 million in funding for a central utility plant to support the $650 million federal lab that will study animal and plant pathogens.

Democrat leaders said they didn't have an issue with Brownback's plan to retire debt, but they would like to spread the money to all levels of government. They have proposed that $16 million be used to help cities and counties retire their debt for local projects.

"We have some other ideas, which I think that are going to do a better job of stimulating the economy and also getting people working and addressing some of the needs that we have in our infrastructure," said House Minority Leader Paul Davis, a Lawrence Democrat.

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