By Nick Gosnell
April 20, 2016
The state’s projected tax collections are forecast to be lower by $93 million for this fiscal year and $135 million for FY 2017.
Budget director Shawn Sullivan outlined recommended options to fill a budget hole, all of the options cut funding from various state agencies. The common denominators among the options are sales tax sweeps from the Kansas Department of Transportation of $185 million over the next two years and the continuation of 3% cuts to the state’s Regents institutions.
The Governor’s preferred option asks the Legislature to redirect a portion of the state’s tobacco settlement to raise about $160 million.
Kansas Action for Children President & CEO, Shannon Cotsoradis responded to that proposal. Cotsoradis said, “I question whether Governor Brownback’s proposal to securitize via proviso is legal. The statute very clearly states that all funds from the Master Settlement Agreement must be deposited into the Kansas Endowment for Youth Fund. Why would we permanently destroy our state’s thriving legacy for early childhood education in exchange for a temporary, one-time budget fix that does nothing to solve the problem? Kansas babies and toddlers didn’t create this budget crisis, and they shouldn’t be forced to pay for it.”
The second option would replace the tobacco deal with a KPERS repayment delay, while the third makes three to five percent cuts to many state departments, including K-12 education.
House Speaker Ray Merrick (R-Stilwell) released the following statement:
“What no one is talking about is that Kansas collected more in taxes so far this fiscal year than it did last year. That despite the fact that oil and gas revenues are down because of low oil prices, agriculture commodities are down, and the national economy continues to stagnate under Obama. The Kansas unemployment rate is at historic lows, and businesses statewide are expanding and adding jobs. We plan to identify budget solutions in the wrap-up session with a broad, clear-headed view of the actual situation.”
House Minority Leader Tom Burroughs (D-Kansas City) also weighed in on the revised consensus revenue estimates.
Burroughs said, “The Kansas economy has deteriorated under the leadership of Gov. Brownback and conservative legislators. The revised revenue number are further evidence of the Republican Party’s failed policies.”
“Democrats stand ready to chart a new path forward. We support responsible tax policies that will create a sustainable source of revenue for the state. Doing so would allow us to prudently invest in programs and services like education and infrastructure, which help to create a better Kansas for all our citizens.”
Annie McKay, Executive Director of the non-partisan Kansas Center for Economic Growth defended the estimating process.
McKay said, “The lowered revenue expectations released today are the product of failed tax policy – not a broken estimating process.”
“This latest Consensus Revenue Estimate (CRE) merely echoes the fact that Kansas’ financial health remains in very poor shape. State revenue collections have come in below estimates 11 of the past 12 months. And it won’t get better, because general fund budgets set by policymakers for both this year and the next leave little to no flexibility for when – not if – continued shortfalls occur.”
“Yet again, the state will bring in less money than it takes to meet public needs. More one-time “fixes” will be used to inadequately support schools, health care, and other areas key to a prosperous future for all Kansans. Unfortunately, unprecedented and unaffordable tax policy continues to wreck our state’s prospects.”
The governor’s budget director, Shawn Sullivan, made it clear that Brownback does not intend to entertain closing the loophole that exempts LLC’s in the state from taxes.
“The Governor doesn’t believe that it’s useful to have a debate about raising taxes on small businesses or anyone else,” Sullivan said.