New Revenue Projection Deepens Kansas Budget Hole

Apr 20, 2016

Estimates for Kansas tax collections were ratcheted down sharply yesterday. The state’s projected revenues dropped by a quarter-billion dollars over the next year-and-a-half. That leaves Kansas with a budget deficit. As KPR’s Stephen Koranda reports, Republican Gov. Sam Brownback is proposing plans for erasing the shortfall.

Kansas will need to find $140 million in the current fiscal year to get out of the red. Next fiscal year, which starts in July, will need another $151 million in cuts or new revenue. Brownback’s budget director, Shawn Sullivan, laid out three options for filling the hole.

“These are the governor’s options to consider. We believe that these take a good view of how to get through this fiscal year and next,” Sullivan says.

Shawn Sullivan talks to reporters after the latest revenue projection numbers were released Wednesday.
Credit Stephen Koranda / KPR/File photo

All three of the governor’s proposals would take almost $200 million from the state highway fund over the next two years, resulting in road project delays. They also all include cuts to higher education. None of the proposals include tax increases or undoing the tax cuts made in recent years.

“We presented three options. We consider these the three best options. The governor doesn’t believe that it’s useful to have a debate at this point about raising taxes on small businesses or anyone else,” Sullivan says.

The governor’s preferred plan would also sell off part of an annual tobacco lawsuit payment for one-time cash. Two alternatives would either delay a state pension payment or cut most state agencies by 3 to 5 percent. The third choice also includes cutting K-12 education by $57 million.

Budget director Sullivan says they’re not looking at reinstating business income taxes because the governor believes those are working to spur the economy.

“Low unemployment, [the] highest number of people working--those are generally good things," Sullivan says. "We can all debate the tax policy and come up with 20 different things for or against."

Sullivan says outside factors, like a downturn in the oil and gas industry, are hurting the state’s bottom line. Democratic Sen. Anthony Hensley says it’s not oil or agriculture causing this budget shortfall. He says it’s the tax cuts.

“We are sacrificing very important parts of our general fund budget on the altar of giving tax breaks to the wealthy,” Hensley says.

Hensley believes more lawmakers are warming to the idea of closing a loophole for business owner income and reinstating taxes for more than 300,000 businesses.

“I think the people of Kansas get that. That’s a very unfair tax system,” Hensley says.

There’s currently a lawsuit over school funding before the Kansas Supreme Court. Democratic Sen. Laura Kelly says that means they shouldn’t even be considering an option that would cut more than $50 million from schools.

“Clearly, we can’t cut schools any more, either morally or legally we can’t do that. If anything, we’re going to have to add more. The only way to do that is to look at our revenue stream,” Kelly says.

The full Legislature isn’t returning from their spring break until next week, but some budget committees will meet Thursday to review the new revenue numbers and the governor’s proposals.