Economist not hopeful for state budget’s future

A member of the team that estimates state revenues said Friday that he hadn’t seen any sign the Kansas economy would be rebounding soon.

“The news is clearly not good,” said Joseph Sicilian, chairman of economics at Kansas University. “The state is in a fiscal crisis, and the state will have to make tough choices next session. Either taxes will have to go up or significant programs will have to be cut.”

Sicilian’s comments came Friday at the KU Media Tour, a gathering of about 30 newspaper editors.

Sicilian is one of six members of the Consensus Revenue Estimating Group. Kansas lawmakers build the state budget based on the group’s estimates.

The group will meet next month to revise an estimate made in March for the 2004 fiscal year, which begins July 1, 2003. The previous estimate said the state would collect $4.589 billion in revenues.

Sicilian said state policy prohibited him from discussing his specific revenue projections.

But he said an estimate made at the same time for the current 2003 fiscal year was about 5 percent over the actual collected revenues. He said he thought the same errors probably were calculated in the 2004 numbers, so the group probably also overestimated those figures by about 5 percent.

That would cut $229 million from the upcoming year’s estimates.

Estimators initially made a 10.5 percent mistake in estimating revenues for this fiscal year, Sicilian said.

“That percentage was a terrible forecast,” he said. “It made things very difficult on our legislators.”

Rep. Kenny Wilk, R-Lansing, chairman of the House budget committee, said he was encouraged when corporate income tax figures released for September were $7 million above projections. That could indicate the economy is rebounding, he said.

“But it’s too early to tell,” Wilk said.

Charles Krider, a KU business professor and panelist, said employment projections compiled by KU’s Policy Research Institute also pointed to recovery.

After two years of decline, the number of jobs in Kansas is expected to hold steady this year and increase about 1.5 percent next year. Unemployment rates are expected to drop from 4.4 percent in 2002 to 3.9 percent in 2003.

“That suggests to me a mild recovery is under way,” Krider said.