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Archive for Tuesday, February 19, 2002

State budget shortfall worsens

Lack of incoming funds darkens picture by more than $1 million daily

February 19, 2002

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— Every day, Gov. Bill Graves' budget director, Duane Goossen, receives a fax from the Kansas Department of Revenue that shows how much is in the state's till.

Every day, the news gets worse.

What had been an estimated $426 million budget shortfall has deepened to $522.7 million because of less-than-expected revenues in November, December and January.

"Nobody should be putting any exact numbers on it yet, but certainly the trend is going below projections," Goossen said Monday.

Because of the worsening budget situation, state economic officials will meet March 8 a month earlier than usual to revise their revenue estimates for the current fiscal year and the one starting July 1.

Since the state forecast in early November, tax collections have fallen $96.7 million below expectations through the end of January. That is more than $1 million per day, and most of that shortfall has been in corporate and individual income taxes.

"Businesses are not making as much money and therefore do not owe as much tax as we thought they would," Goossen said. "In slow economic times, that's a tax source that falls off rather quickly."

Declining revenue means lawmakers should prepare for the worst, said House Speaker Kent Glasscock, R-Manhattan.

"This is going to be the most difficult budget year since World War II," he said.

A $500 million-plus budget shortfall would mean that lawmakers would be looking at revenues more than 10 percent below a current-services budget.

"Without new revenue, you can't avoid serious cuts," Goossen said.

During the past week, legislative budget committees have been adopting what is known as the "green" budget the bare-bones spending plan submitted by Graves to fulfill his statutory duty to provide a budget within available revenue. That budget has a green cover.

At the same time, the committee members are denouncing the budget because it would cut funding to public schools, higher education and social services. Those functions constitute 85 percent of state spending.

Goossen said the exercise is important.

"Both the House and Senate committees are going through the normal process of going through budget by budget. They have to come to terms with each of those agency budgets. It's important for them to understand what's in the green budget," he said.

Graves has also said the green budget is inadequate and has proposed a $228 million tax increase, which includes increases in the state sales, cigarette and fuel taxes.

Glasscock said Republicans in the Legislature, who are substantial majorities in the House and Senate, have been relatively open about talking about tax increases, although nervous at the same time.

He said as the session continues, more lawmakers are becoming more knowledgeable about the budget situation and supportive of increased taxes to produce more revenue.

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