Archive for Saturday, November 3, 2001

Kansas coffers lacking millions

Budget far exceeds revenues

November 3, 2001


— The state will have $113.4 million less than legislators and Gov. Bill Graves thought when the current state budget was approved, forecasters said Friday.

However, the state officials and university economists who drafted new revenue estimates for the state didn't have a clear answer as to how their numbers will affect the current budget or the one Gov. Bill Graves and legislators will draft next year.

The numbers assume two things.

One is the national and Kansas economies will remain in a slump for about another year, with the state losing corporate and individual income tax revenues from lower profits and layoffs. Another is that economic conditions will improve toward the end of 2002.

Gov. Bill Graves and legislative leaders said the decision to issue more pessimistic estimates for revenue collections in fiscal 2002 wasn't surprising. Figures for tax collections from July 1 through Oct. 31 suggested as much.

Graves and Budget Director Duane Goossen wouldn't say that the budget would have to be cut, but they said the financial picture is grim.

"Today's revenue estimate presents us with a very difficult budget challenge," Graves said in a statement. "This report confirms that Kansas is settling into the same economic trends that are affecting the entire nation."

The forecasters members of the Consensus Estimating Group met for about three hours in a closed session. The group includes Goossen and members of his staff, Department of Revenue officials, members of the Kansas Legislative Research Department and three university economists.

Besides revising estimates made in April for fiscal 2002, the group issued the first estimates for fiscal 2003. Graves and legislators must use the group's numbers in drafting the state's 2003 budget.

During a news conference, Goossen wouldn't speculate on how the numbers would affect either the current budget or the 2003 budget. But he said the state can't spend as much money in 2003 as legislators and Graves approved under the current budget.

For fiscal 2002, state agencies received permission to spend a little more than $4.5 billion from the state general fund. The general fund is the largest source of money for Kansas government programs, and it's where the state deposits its tax money.

Tax revenues would be about $4.4 billion not enough to cover that spending, unless treasury balances are used.

The forecasters said revenues would grow about 3.4 percent in fiscal 2003, or about $153 million. But under Kansas law, the state has to keep a minimum balance in its treasury eating up much of the increase.

Making the 2003 budget problems worse are promises legislators made in previous years to increase spending on higher education and highway projects, commitments to new spending on employee pay and pensions, unexpected increases in health care costs for government employees and unanticipated growth in the cost of social services.

"The exact numbers and implications, it's going to take some time for that to come out," Goossen said. "There are some really difficult decisions ahead."

Commenting has been disabled for this item.