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Archive for Thursday, June 5, 2008

State’s budget outlook not rosy

June 5, 2008

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— New figures on tax collections suggest the state is heading for big budget problems.

Preliminary figures from the Department of Revenue show that the state collected $51 million less than anticipated in taxes in May. The shortfall between expectations and actual collections was 7.7 percent.

Legislators based their budget decisions on a financial forecast made by state officials and university economists in April. When they adjourned their annual session last month, legislators expected to face financial headaches when they reconvened in January.

But the state could face serious problems before then if the shortfall in May tax collections proves to be a trend. Gov. Kathleen Sebelius could be forced to consider trimming spending from the budget before 2009.

"We're somewhat in a free fall," Senate Ways and Means Committee Chairman Dwayne Umbarger, a Thayer Republican who helped draft the final version of this year's budget legislation, said Wednesday.

The state expected to collect $664 million in general tax revenues in May but took in only $613 million, according to the department's figures.

Without a rebound in June, the state will begin its 2009 fiscal year on July 1 with smaller cash reserves than anticipated. Legislators had believed those reserves would allow the state to sustain spending they approved for the next fiscal year.

As for Sebelius, spokeswoman Nicole Corcoran said, "She's monitoring things closely."

Legislators approved a $13.6 billion spending plan for the next fiscal year. It increases aid to public schools by 5.5 percent, keeps up with the growing costs of social service programs and gives most state workers a 2.5 percent pay raise. Overall spending will rise about 3 percent, or $391 million.

When legislators adjourned their session, they expected the state to end its 2009 fiscal year with $119 million in cash reserves.

"We may have to come back next session and revisit some of those budget items," Umbarger said.

Asked about Sebelius being forced to trim spending before then, Umbarger said: "If the June and July numbers come with the amount of decline that we've seen in May, I think it's a very real possibility."

Such a scenario played out in 2002, with the national economy reeling from the Sept. 11, 2001, terror attacks.

Legislators approved tax increases to prevent cuts in essential programs, but it wasn't enough to stave off revenue shortfalls. Then-Gov. Bill Graves was forced to cut spending in August and then again in December, including on education and social services.

Sebelius has said Kansas is fortunate because its economy has been stronger than in other states. And Umbarger said he's hoping that economists who expect the current national downturn to be brief are correct.

There's also the promise of revenues from four state-owned casinos and slot machines at dog and horse tracks authorized last year. Legislators did not build those revenues into their budget.

Comments

klthompson1 6 years, 6 months ago

hawkperched...Nice. I'm glad you're all for the layoff of staff that help to support your great University. MANY of the KU staff that keep it running are funded by the state. It would be unfortunate if University jobs had to be cut. I hope that this can be resolved without cutting jobs that are necessary to the University, and subsequently the education of our students.

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