State’s new fiscal forecast pessimistic

? Efforts by the federal government to boost a slowing national economy have created a big headache for Kansas officials in finishing work on the state’s next budget.

State officials and university economists issued a new, more pessimistic financial forecast Wednesday. The forecasters said revenues will be $130 million less than originally thought because of federal tax cuts, which cost the state revenue, and lower interest rates expected to decrease the state’s earnings.

The forecasters told Democratic Gov. Kathleen Sebelius and the Republican-controlled Legislature that they will have 2 percent less in state funds than under the previous forecast.

It wasn’t clear how much they would rethink their plans to enact a budget providing a modest increase in spending for the fiscal year beginning July 1. They could continue on their current course, but that could create serious problems next year.

“It gives us some challenges,” said Senate budget committee Chairman Dwayne Umbarger, a Thayer Republican. “I wish the federal government had thought more about what it would do to state budgets with the stimulus package.”

The forecasting group, which meets twice a year, is made up of Department of Revenue officials, members of the governor’s budget staff, legislative research staff and economists from the state’s three largest universities. Their numbers guide the governor and legislators in making budget decisions.

Legislators left important issues about social services and higher education spending unresolved before beginning their annual spring break, largely because they wanted to see the new fiscal forecast.

They are scheduled to reconvene April 30 to wrap up their work for the year.