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Kansas' internal borrowing for budget declines

TOPEKA, Kan. (AP) -- Kansas expects to rely less heavily on internal borrowing to pay its bills on time during the fiscal year that starts in July, and Republican Gov. Sam Brownback said Tuesday that it's another sign of improvement in state government's finances.

During a brief Statehouse meeting, Brownback and legislative leaders unanimously approved a $300 million loan to the state's general fund from other accounts. By law, the loan must be paid before the next fiscal year ends with June 2014.

The general fund is the state's main bank account and where it deposits most of its tax revenues, used for financing general government programs and providing aid to public school districts.

Because tax collections vary month-to-month, the state routinely resorts to internal borrowing to temporarily meet its cash needs. It's similar to a family temporarily moving money from a savings account into its main checking account to pay its mortgage and utility bills on time.

The state's internal borrowing peaked at $775 million during the fiscal year 2010, which ended in June of that year, and has declined since. It was $700 million for fiscal 2011, the year Brownback took office; $600 million for fiscal 2012 and $400 million for the current fiscal year.

"I'm really pleased that we're, at this point, getting that number down," Brownback said. "We're making good progress."

But Senate Minority Leader Anthony Hensley, a Topeka Democrat, was skeptical that the state's finances will remain strong.

Hensley noted that the Republican-dominated Legislature has approved personal income tax cuts that are expected to result in a net loss of revenues to the state of $4.1 billion through fiscal 2018. Democrats opposed the cuts as reckless, and Hensley predicted that the state will soon be resorting to greater internal borrowing to pay its bills on time.

"I think the trend will reverse itself," Hensley said.