State budget problems worsen
The threat of cuts to public schools rose Thursday as officials announced the state faced a nearly $350 million state budget hole in the current year.
Despite the spiraling fiscal problems, Gov. Sam Brownback’s budget director, Shawn Sullivan, said the governor would wait to present a budget plan to the Legislature in January at the start of the 2017 session instead of making any immediate cuts.
Even so, with public school funding making up half of the state budget, the possibility of cuts loomed.
State budget experts revised downward earlier revenue projections by $346 million for the current fiscal year — a drop of almost six percent — and for the next fiscal year, which starts July 1, 2017, another $444 million. That means there is an $800 million hole to fix just to balance the books for the remainder of this fiscal year and the next one. Current state spending is approximately $6 billion per year.
Legislative researchers said the reductions in revenue estimates may be a record.
Officials lowered the estimates for the current year in large part because the Kansas economy is in bad shape. Gross state product for the current year is not expected to grow at all and Kansas personal income will grow only two percent. Projections for growth next year were also reduced and state officials said they didn’t expect any kind of turnaround for the next two years.
Despite the spiraling fiscal problems, Gov. Sam Brownback’s budget director, Shawn Sullivan, said the governor would wait to present a budget plan to the Legislature in January at the start of the 2017 session instead of making any immediate cuts.
Even so, with public school funding making up half of the state budget, the possibility of cuts loomed.
State budget experts revised downward earlier revenue projections by $346 million for the current fiscal year — a drop of almost six percent — and for the next fiscal year, which starts July 1, 2017, another $444 million. That means there is an $800 million hole to fix just to balance the books for the remainder of this fiscal year and the next one. Current state spending is approximately $6 billion per year.
Legislative researchers said the reductions in revenue estimates may be a record.
Officials lowered the estimates for the current year in large part because the Kansas economy is in bad shape. Gross state product for the current year is not expected to grow at all and Kansas personal income will grow only two percent. Projections for growth next year were also reduced and state officials said they didn’t expect any kind of turnaround for the next two years.
As a result, tax receipts for the year ending June 30 are now expected to be $345.9 million lower than projected by the last official estimate in April - a drop of almost 6 percent.
For the upcoming year, Fiscal Year 2018, tax receipts are expected to increase by a modest 1.4 percent. But the official revenue estimate uses “current law” for transfers into and out of the general fund. That means it assume the Legislature will not shift funding from the state highway fund into the state general fund, and will start making payments into other funds.
Instead of transferring $182 million INTO the general fund, as is planned in the current year, by state law $287 million should be transferred OUT of the general fund in FY 2018. This means total state general fund receipts would drop by 7.4 percent in 2018
The Legislature has relied on these transfers to help close the budget gap in recent years, and these would be an option to close the budget shortfall. However, such shifts from programs such as the state highway fund have become more controversial.
Raney Gilliland, director of the Kansas Legislative Research Department, said the state woes are the result of a combination of factors: slumping agriculture and energy prices and the large income tax cuts under the Brownback administration.
Since the first tax cuts were implemented, the state has fallen short of revenue estimates in 33 of 46 months. The state budget has been cut, payments delayed, reserve funds swept, and the state sales tax increased to make up the shortfalls.
Many of Brownback’s legislative allies, who helped push through the tax cuts, have been voted out of office or retired. The Legislature has moved more towards the center with many incoming legislators promising to undo Brownback’s tax changes.
Since the first tax cuts were implemented, the state has fallen short of revenue estimates in 33 of 46 months. The state budget has been cut, payments delayed, reserve funds swept, and the state sales tax increased to make up the shortfalls.
Many of Brownback’s legislative allies, who helped push through the tax cuts, have been voted out of office or retired. The Legislature has moved more towards the center with many incoming legislators promising to undo Brownback’s tax changes.
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