Kansas governor seeks 4 percent in spending cuts to balance budget

(Reuters) - Kansas Governor Sam Brownback on Tuesday called for steep budget cuts and fund transfers to plug a $280 million hole in the state's current budget. The Republican governor ordered 4 percent in spending cuts as well as a steep $40.7 million reduction in state contributions to its public employees retirement system to save $78.5 million. The remaining $201.5 million would be tapped from several state funds subject to legislative approval. State Budget director Shawn Sullivan said in a memo the deficit projection made last month resulted from a lower revenue forecast and expectations of increased expenditures for education, Medicaid and other programs. State agencies and officials can appeal the cuts, which would take place at the midpoint of the fiscal 2015 budget, to the governor by Dec. 19. Under a plan passed in 2012 that Brownback said would spur economic growth, Kansas began ratcheting down income tax rates through 2018 and eliminating some taxes on business income. The subsequent drop in revenue contributed to one-notch downgrades of the state's credit ratings to Aa2 by Moody's Investors Service in April and to AA by Standard & Poor's in August. Both credit ratings agencies said the state had not cut spending deep enough to compensate for the loss in revenue. (Reporting by Karen Pierog, editing by G Crosse)