TOPEKA – News that the state of Kansas will suspend income tax refunds, and may not be able to make payroll this week, is proof that our state is in desperate need of a budget stabilization fund, said Americans for Prosperity-Kansas state director Derrick Sontag.

“Kansas is one of the few states operating without a rainy day fund,” Sontag said. “The current budget crisis looming over our state demonstrates why we must have a budget stabilization fund to help us see through such difficult times.”

Only Arkansas, Colorado, Illinois, Kansas and Montana operate without a budget stabilization fund. Sontag said building reserves during times of tax revenue increases are crucial to weathering a drop in state revenue, like the one we are currently experiencing.

“With a budget stabilization fund, taxpayers win because the likelihood of a tax increase to pay for government services during a downturn is reduced,” Sontag said. “And those who rely on government programs will know money has been saved to ensure the services on which they rely will continue.”

Sontag said the revenue stream is not behind the state’s financial woes. He said two years ago Kansas had nearly a billion dollars in the bank, and thanks to large increases in state spending each year, we have a deficit of more than $200 million.

“Today’s news is just further evidence that over spending has become a major problem in this state,” he said. “Had we restrained spending growth to five percent since 2004, we wouldn’t be facing this budget shortfall.”

Limiting spending growth to five percent and creating a budget stabilization fund were both key elements of AFP’s 2009 Legislative Agenda. Sontag planned to testify in favor of creating a budget stabilization fund today before a House committee.