Archive for Monday, November 3, 2008

State’s budget forecast expected to get gloomier

November 3, 2008


— The state's budget outlook probably will get worse on Election Day and could force legislators to rethink past promises about spending on public schools, higher education and social services.

State officials and university economists plan to meet at 1 p.m. Tuesday to revise existing estimates for anticipated revenues during the current budget year. They'll also project revenues for fiscal 2010, which begins next July.

Legislators already expected that when they convened their next session in January they'd face a gap of $200 million or more between projected revenues and current spending commitments for fiscal 2010. The gap is likely to grow after Tuesday's meeting.

Several forecasters said it's difficult to predict how much worse the budget outlook will get because of recent volatility in the nation's economy.

"I don't even think it's started to bottom out," said John Wong, a Wichita State University professor of public administration who's participated in the forecasting for nearly two decades. "It's a question of, I think, whether the bottom is six months out, or a year and six months out."

Gov. Kathleen Sebelius will use the new forecast in drafting budget proposals for the 2009 Legislature, and lawmakers rely on the same numbers.

"I expect the new revenue estimate will show that the state's income will be lower than originally forecast, which means we will have an even tougher budget," Sebelius said in a statement.

Semiannual projections

Each fall and spring, the forecasters issue projections for income taxes, sales taxes and other general revenues that aren't automatically dedicated to specific purposes, like federal funds, university tuition and other fees.

Aid to public schools consumes half of general revenues. An additional third goes to higher education and social services.

In April, the forecasters predicted the state would collect $6.02 billion during the current fiscal year. The current budget would leave the state with about $116 million in cash reserves at the end of June 2009 - if the current projection proved accurate.

Several forecasters declined to make predictions about how the numbers will change.

"The uncertainties are higher than normal," said Duane Goossen, Sebelius' budget director. "No one was really forecasting what happened in the last six weeks."

Steve Stotts, the Department of Revenue's director of taxation, added: "What happened in the last six weeks, is that kind of the bottom and we'll maybe start trending up gradually in the next six weeks or so, or do we still have some holes to hit?"

Outsiders are talking, however. Sen. Dwayne Umbarger, a Thayer Republican who's chairman of his chamber's budget-writing Ways and Means Committee, said the new projection for total fiscal 2009 revenues could be from $75 million to $125 million lower than the current one. House Speaker Melvin Neufeld, an Ingalls Republican, predicted "a considerable drop."

Spending constraints

Even if the current forecast holds true, trouble looms because of legislative promises about spending in recent years. Last week, legislative researchers predicted a shortfall between anticipated revenues and spending commitments of $228 million for fiscal 2010.

The state constitution prevents Kansas from running a budget deficit, so lawmakers would have to make adjustments. Several leaders said there's little or no support for raising taxes.

Gambling could ease the sting. The state has collected nearly $56 million in privilege fees from prospective casino developers under a law enacted last year. But the first casino is months away from opening, even in temporary quarters, and efforts to put slot machines at dog and horse tracks have foundered.

Sebelius anticipated the potential need to trim spending earlier this year, ordering state agencies to make plans to reduce current budgets 2 percent and recommend ways to trim as much as 5 percent more in fiscal 2010.

But she also has said she will protect public schools and higher education. A lawsuit and resulting Kansas Supreme Court rulings has led the state to increase its aid to public schools by 39 percent, or $892 million, since the 2004-05 school year.


SettingTheRecordStraight 9 years, 4 months ago

Cut taxes. Cut government spending. Increase prosperity.

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