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Archive for Thursday, October 23, 2008

Kansas leaders fear state budget will be as bad as 2002 and involve cuts

October 23, 2008

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— Veteran Kansas leaders Thursday said the state budget situation was worsening and they feared it may get as bad as 2002 when cuts were made to education and social services.

"There's a tremendous amount of stress on the economy from every direction," said state Rep. Kenny Wilk, R-Lansing, and chairman of the House-Senate Committee on Assessment and Taxation.

During a committee hearing, Wilk, who is not seeking re-election, and Kansas Department of Revenue Secretary Joan Wagnon warned legislators of tough times ahead in the 2009 legislative session that starts in January.

"My advice to everyone is caution and hold on to the sides of the boat," Wagnon said.

Total receipts to the state for the first quarter of the fiscal year were $18.9 million short of projections. And while that is only 1.4 percent below expectations, some bigger drops, such as a 9.2 percent shortfall in corporate income tax, were signs that national economic woes would soon affect the Kansas budget situation, officials said.

And a sour economy will produce greater demand for social service spending, officials said.

"That's going to exacerbate some of your financial problems next session," said Chris Courtwright, principal economist with the Kansas Legislative Research Department.

Wilk warned legislators that in 2001 and 2002 corporate income tax in Kansas dropped "like a rock," forcing officials to cut budgets. "It was God-awful," he said.

In 2002, state government was reeling from recession and the after-shocks of 9-11 on the Kansas aircraft manufacturing industry.

Then-Gov. Bill Graves pushed through a $250 million tax increase to balance the state budget, but revenues continued to tumble, so shortly after that he cut $120 million, which included reductions to schools and social services, before handing off state government to incoming Gov. Kathleen Sebelius.

In recent months, Sebelius has called on state agencies to reduce current budget allocations by 2 percent.

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