November 11, 2015
As recently as a month ago, Gov. Sam Brownback was telling Kansans he wasn’t considering either tax increases or spending cuts to deal with state revenues that consistently were falling below estimates.
“We’ll try to figure a way through it another way,” he said in early October in response to September’s disappointing revenue report.
However, last week, after the state’s Consensus Revenue Estimating Group got together, the writing was on the wall. At the same time the governor’s office announced that the estimated revenue for the current fiscal year had been reduced by $159 million, it also announced a plan to move funds and cut funding in a number of areas. Even with budget adjustments totaling $124 million, the state is projecting that just $5.6 million will be left in state coffers when the fiscal year ends on June 30.
And that’s if everything goes as planned.
The budget adjustments include taking another $48 million from the Kansas Department of Transportation, a move that Budget Director Shawn Sullivan said would not affect projects currently underway but could cause delays in “preservation” projects aimed at preventing the need for major repairs later on. How long will it take KDOT to catch up from the financial hits it has been taking?
The plan also counts on projected spending reductions for state pension contributions ($15.7 million) and Medicaid ($25.1 million). Another $9 million will be swept from the Kansas Children’s Initiative Fund. Sullivan said that cut would not affect long-term funding for children’s programs in the state, but Shannon Cotsoradis, CEO of Kansas Action for Children begged to differ, saying, “to suggest these decisions are without consequences for our state’s children, that is simply false.”
The governor has the authority to make most of the $124 million in budget adjustments on his own, but about $14 million in cuts will require approval by the Legislature when it convenes in January. That includes a $5 million cut for the Kansas Bioscience Authority. That may be the death knell for that agency, which announced in July it would lay off half its staff and stop making new investments because of reduced state funding.
The Brownback administration blames a poor national economy for the state’s revenue woes, but a recent report from Wichita State University’s Center for Economic Development and Business research indicated the Kansas economy is growing significantly slower than in the rest of the nation. As did Sullivan last week, the WSU report noted the sluggish agriculture and oil and gas industries in the state, but it’s hard to ignore the impact that large income tax cuts approved in 2013 are having on state revenues.
All of this doesn’t paint a pretty picture for Kansas’ economic future, and the end is not in sight. In addition to the shortfall for this fiscal year, the estimating group also predicted that revenue next year would be $194 million below previous estimates.
Those estimates are what the governor and state legislators will be working with as they finalize the budget for the fiscal year beginning July 1, 2016. Considering the chaos that marked the budget process this year, Kansans can only hope that the governor and legislators will come up with a more reasonable strategy — including reconsideration of the governor’s continued “march to zero” for state income tax.