November 20, 2015
The latest downbeat facts about the Kansas economy are at odds with the unrealistic pronouncements spouted by Gov. Sam Brownback.
But don’t take our word for it.
State officials desperate to balance the budget are raiding programs that benefit children and repair roads, while conceding that tax revenues will grow even more slowly than once predicted. These actions are damaging the state’s ability to deliver crucial services to Kansans.
The income tax cuts that Brownback and the Legislature trumpeted in 2012 as the savior for the economy have failed abysmally. The Legislature needs to rescind parts of them in 2016 to raise funds and make the tax system fairer.
Among reasons for pursuing those outcomes:
▪ The expected growth rate of Kansas’ gross state product has been slashed to 1.2 percent for 2015, only half of the expected rate for the U.S. gross domestic product. This information was released by the Kansas Legislative Research Department and the Division of the Budget.
▪ The same officials concluded that personal income in Kansas, once predicted to surge by 3.4 percent in 2015, is now estimated to go up only 2.2 percent. Again, that’s just half of the expected growth rate for U.S. personal income.
▪ Total employment in Kansas for October was 10,900 higherthan in October 2014, according to the U.S. Bureau of Labor Statistics on Friday. But those gains were below what state officials had predicted. And the growth rate of 0.8 percent for the last year was about half the national average (sound familiar?) and was tied for the 10th worst year-over-year rate among U.S. states.
Most Kansans are dismayed by Brownback’s leadership. Indeed, in a survey released Friday, he by far had the lowest approval rating of America’s governors.
And we haven’t even come to the most concerning news.
Earlier this month state officials announced cuts of more than $120 million in the 2016 fiscal year budget that began July 1. That included yet another large diversion — this time of $50 million — from future highway projects.
Even after all the spending reductions, Kansas is expected to have a paltry $5.6 million in reserves by June 30, 2016. And that’s if everything goes great in the next eight months and the state collects as much money as predicted.
In 10 days, the Kansas Department of Revenue is scheduled to release revenue numbers for November. Uneasy legislators and other government officials will be on pins and needles waiting for that report because the state has failed in all four months of the 2016 fiscal year to meet expectations.
State officials and economists earlier this month reduced future predictions, so the numbers should be easier to hit.
Problem solved? Not nearly.
The National Association of State Budget Officers’ most recent fiscal survey showed that Kansas would have the ninth worst rate of total balances compared to spending for the 2016 fiscal year. However, that was before the estimates of reserves plummeted to $5.6 million. Take that into account, and Kansas could have theworst rate of total balances.
The reserves are critical because the lower they are, the greater the fear that a big miss in revenues or a natural disaster in Kansas could easily wipe out money needed for a rainy day. That could lead to more, unanticipated cuts to existing budgets of state departments, such as social services and education.
Then there’s the pesky problem of state sales tax receipts.
Yes, they are up for the year by about 7 percent but only because Brownback and legislators who purport to be so interested in slashing taxes actually approved a big jump in the sales tax rate in 2015. But sales tax revenues haven’t yet come close to matching early estimates.
Finally, there’s the possibility that legal rulings could compel the Legislature to spend a lot more money on education.
A court could decide that the new K-12 block grant funding formula approved by Brownback and the Legislature is unconstitutional.
The biggest victory for K-12 schools would be a Kansas Supreme Court decision ordering the state to provide hundreds of millions of dollars a year in extra funding for education. Obviously, the state does not have that money on hand, especially after the Brownback administration has spent down the reserves over the last three years.
All of these actions by Brownback and other state officials have real consequences.
In their budget cuts of early November, state officials included a $9 million sweep from the Children’s Initiative Fund. Budget Director Shawn Sullivan said programs would not be affected.
But Kansas Action for Children officials who oversee the children’s fund recently said the state’s move “will reduce grant awards already promised to 20 Kansas programs…. These programs produce some of the most impressive early childhood outcomes in Kansas, and they are being sacrificed for a failing tax plan that has spiraled out of control.”
That about sums up the depressing state of the Kansas budget.