From KASB
State tax revenue revised downward by $276 million
State officials on Monday decreased tax revenue estimates again, a move that could have ramifications for school funding, which makes up just over half of the state budget.
Gov. Sam Brownback’s budget director, Shawn Sullivan, said in talking with legislators, most say they want to leave K-12 funding alone.
But Sullivan noted the falling state revenue picture will make balancing the budget more challenging as legislators prepare for the wrap up session starting April 29. And he said recent local school bond approvals will increase costs to the state.
Tax revenue for the remainder of the current fiscal year and the next two fiscal years was revised downward by $276 million since the last revenue estimate was made in November 2014. That includes $87.5 million in the current fiscal year, $99.6 million in the next one which starts July 1, and $88.4 million in the one after that.
Because of other budget adjustments, Sullivan said the state has to come up with $400 million in taxes, cuts or a combination to balance the budget for the next fiscal year, which starts July 1.
Brownback has proposed tobacco and liquor tax increases and slowing down future state income tax cuts to produce a package worth about $210 million, Sullivan said. If legislators were to pass that plan — and that’s a big if because the proposal has gotten no traction so far — they would still have to come up with a $190 million more in tax increases, cuts or both.
Sullivan said Brownback will release a budget amendment later this week that will reduce spending by approximately $80 million, with about half of that amount coming from reduced Medicaid caseloads. The House Appropriations Committee will meet Thursday to start work on the budget.
The dire financial news rekindled debate over Brownback’s income tax cuts from 2012 and 2013. Brownback said the cuts would boost the economy.
Since then, revenue declines that are deeper than estimates have been the norm. State bonds have been downgraded by Standard & Poor’s and Moody’s Investor Service, and transfers from the state highway fund have increased.
“The Brownback tax plan is a failure and is endangering the future of the state of Kansas,” said House Minority Leader Tom Burroughs, D-Kansas City. “We must commit to generating a dependable revenue stream that is able to provide the resources necessary to reinvest in Kansas communities and grow a successful economy over the long-term.”
But Sullivan defended the income tax cuts, saying Kansas was enjoying low unemployment.
The revised numbers were produced by the Consensus Revenue Estimating Group, which is made up of legislative researchers, Brownback’s budget staff, Kansas Department of Revenue officials and university economists.
The estimating group said the Kansas economy and state personal income were lagging the nation.