$57.3 million cut to schools under option presented by Governor: A blog by the Kansas Association of School Boards

ALERT: Public schools would face $57.3 million cut under option presented by Governor: Another projected revenue shortage for state

Public schools would face a $57.3 million cut under an option proposed by Gov. Sam Brownback on Wednesday to balance the budget in the face of worsening state financial news.

KASB issued a statement on the proposal, saying: “We are deeply concerned this is on the table. School districts were told the block grant would be protected. Both our policies and our members say there needs to be another option and that is raising revenue to avoid these cuts.”

Brownback’s Budget Director Shawn Sullivan said the option, including the cut to schools and Medicaid, was the least favorite of the Governor’s but Brownback has put it out there for legislators to consider when they return Wednesday for the wrap up session.

Sullivan unveiled three options.

All the options would reduce state sales tax revenue going to the highway fund by $70 million in the current fiscal year and $115 million in the next fiscal year that starts July 1. And all would reduce funding to higher education.

One option would also cut state agencies in fiscal year 2017 from 3 percent to 5 percent, including public schools, which would sustain a $57.3 million cut. In this option, Medicaid, Kansas University, Kansas State University and Wichita State University would face 5 percent cuts while numerous other agencies would be cut too.

The proposed cut to public schools would exclude payments to KPERS, bond and interest aid, Local Option Budget aid and Capital Outlay aid.

Another option would securitize tobacco payment settlements, a proposal strongly opposed by the advocates of children’s programs funded with tobacco funding. And another option would delay a quarterly payment to the Kansas Public Employee Retirement System until 2018, rather than next year, and reduce expenditures by $25 million through unidentified efficiencies.

Sullivan released Brownback’s options as the state budget situation continued to worsen on Wednesday.

Revenue estimates were decreased for the current fiscal year by $94 million and were decreased for the next fiscal year by another $135 million for a total shortfall of $229 million. The tax receipt numbers were even worse, downgraded $177 million in the current fiscal year and $171 million in the next. Total revenue reductions are not as steep as the tax only decline because of revenue transfers from other parts of the budget.

Budget director Sullivan noted that despite the lower estimates, tax revenue in the current fiscal year is expected to be about $150 million higher than last year. However, the Legislature passed a tax increase last year that was expected to raise $380 million. “You can stop calling it the largest tax increase in history,” he told reporters.

In addition, the estimate of Kansas personal income for the current fiscal year was reduced from 3.9 percent to 3.5 percent from earlier projections.

Budget experts said Kansas has been hurt by lower prices in the agriculture, oil, gas, and aircraft industry.

The state budget has been troubled since state income tax cuts, which Brownback pushed for, took effect.

Since then, Brownback has pushed through two increases in the state sales tax, swept reserves, taken money from the highway department and borrowed to prop up the state pension system.

The state has failed 11 of the past 12 months to hit its revenue estimate and the shortfall was so deep in March, Brownback immediately cut higher education by $17 million. Earlier this month, Brownback delayed a $93 million payment to the state pension fund.

Some Republicans who supported Brownback’s state income tax cuts now say they would like to repeal the cuts that exempted the owners of 330,000 businesses from paying any state income tax. Critics of that tax cut have long argued the cuts didn’t produce the promised economic growth. But Brownback has threatened in the past to veto such a move.

Sullivan on Wednesday reaffirmed the Governor’s opposition to changing that tax cut, but did not specifically threaten a veto.