Archive for Monday, May 27, 2002

Budget biggest issue facing candidates for governor, House

May 27, 2002

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— On paper, the next state budget looks solid, and legislators seem to have resolved the state's financial problems by increasing taxes $252 million.

But the reality during the state's 2003 fiscal year, which begins July 1, is likely to be different. Officials expect the state to collect far less tax revenue than forecast and the shortfall to be large enough to leave the state struggling to avoid a budget deficit.

The new governor inaugurated next January and the Kansas House members sworn into office the same day are likely to face serious budget problems and the same hard choices they faced in the 2002 session of cutting spending, raising taxes or doing some combination of both.

That should make the budget and how to resolve the state's financial problems the biggest issue for candidates running for governor and the House.

"The question is, really, will there be a legitimate debate, or will the candidates skirt the issue?" said state Republican Chairman Mark Parkinson.

Candidates not saying much

In recent months, the major gubernatorial candidates have been vague about how they would deal with the state's financial crisis. They've had the luxury of deferring to the Legislature because it was in session.

That's exactly what the presumed Democratic nominee, Insurance Commissioner Kathleen Sebelius, did. In the GOP race, Bob Knight has talked about his tenure as Wichita mayor and said with enough economic development, there wouldn't be a budget problem.

State Treasurer Tim Shallenburger, seen as conservative Republicans' choice, has pledged not to raise taxes, as specific a statement as anyone has made. But when legislators pressed him to identify places to cut and he showed up for a House Appropriations Committee meeting he provided few details.

The governor's race has existed apart from fiscal reality. While legislators were in session, the candidates could hope that lawmakers would solve the state's budget problems, so they wouldn't have to face them.

After 106 days in session, the Legislature neither cut spending deeply enough nor raised taxes enough.

Outdated revenue forecast

The budget legislators approved does look solid. It would spend about $4.42 billion during fiscal 2003 from the state general fund, leaving a balance at the end of the year of $275 million.

That balance would be about 6.2 percent of expenditures not the 7.5 percent normally required by state law, but higher than the 5 percent target legislators set for fiscal 2003.

But the budget is based on a revenue forecast made March 8 that already seems woefully out of date. In March and April, revenues were $58 million short of the estimates and are expected to fall short by more.

On May 15, as legislators were struggling to end their session, Revenue Secretary Stephen Richards sent a memo to their staffing predicting that income tax collections for fiscal 2002 would be $160 million short of estimates.

That shortfall would occur again in 2003, because 2003's revenue forecast starts with the 2002 numbers as a base. That makes the total shortfall $320 million.

That would be enough to leave the budget with a $45 million deficit at the end of fiscal 2003 requiring spending cuts to get back to zero.

But under Kansas law, zero won't be good enough for the new governor and legislators. That governor will be legally required to submit a proposed fiscal 2004 budget that projects an ending balance of 7.5 percent about $329 million, if spending were to remain constant.

"I don't think anyone can fool themselves into believing that we leave here with a sound budget at all," said House Minority Leader Jim Garner, D-Coffeyville.

Elections to fill all 125 House seats senators aren't on the ballot until 2004 will give voters a chance to show how they feel.

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