Topeka Legislators must consider proposals for boosting revenues to help prevent a deficit in the next state budget, the House Appropriations Committee’s chairman said Monday.
Rep. Kevin Yoder, an Overland Park Republican, said the GOP-controlled Legislature might be able to pass a revenue package worth about $150 million, picking among proposals already outlined by Democratic Gov. Kathleen Sebelius.
Sebelius’ proposals include suspending some planned tax cuts, tapping anticipated gambling dollars and diverting revenues from cities and counties. She’s also suggested that Kansas consider “decoupling” its income tax code from the federal income tax code.
Legislators already have approved a $13 billion budget for the state’s 2010 fiscal year, which begins July 1. But officials and university economists issued a new, more pessimistic revenue forecast last week, and the approved budget is now expected to result in a deficit of $328 million.
Yoder said he wants to make more than $328 million in adjustments to the 2010 budget, so that the state has some cash reserves at the end of fiscal 2010. He said $100 million in reserves would provide an adequate cushion in volatile economic times.
“We’re obviously going to have to do something on the revenue side of the picture,” Yoder said. “I think there are some things the governor has proposed that we may be willing to accept.”
Yoder’s committee plans to meet Tuesday and Wednesday to draft the year’s last spending bill. The Senate Ways and Means Committee is scheduled to convene Wednesday for up to three days of meetings, to draft its own version. The entire Legislature returns from its annual spring break April 29.
The budget-writing committees won’t draft the entire package for eliminating the projected deficit, unless legislators do it only by cutting spending. Some proposals would require changes in tax laws, which are handled by other committees.
Last week, Sebelius listed $180 million worth of revenue proposals that she’s been pushing since January but which haven’t gotten much traction with Republican legislators. She also noted that decoupling the state and federal tax codes would boost state revenues by $77 million.
Sebelius spokeswoman Beth Martino said those initiatives would “make a substantial dent in the deficit.”
“She’s hopeful that they will consider those options before they move on to other proposals,” Martino said.
But Senate Majority Leader Derek Schmidt, an Independence Republican, said there still aren’t enough revenue proposals to eliminate the deficit. Legislators also will be forced to consider further spending cuts.
Democrats have been pushing decoupling the state and federal tax codes for several weeks. Currently, changes in the federal tax code affect the state’s revenues, and the recently enacted federal stimulus package includes tax breaks for business and others.
But GOP leaders have been skeptical of the idea, noting that the business tax breaks are meant to stimulate the economy and phase out over time. Also, the stimulus legislation increased an income tax credit for poor, working families.
Sebelius and fellow Democrats want to include $50 million in privilege fees for yet-to-be-chosen developers of state-owned casinos in Sumner and Wyandotte counties. Republicans have resisted the idea, but Yoder said the money could be socked away in cash reserves.
The governor also proposes to divert $52 million in revenues that normally would flow to cities and counties along with another $29 million in fees collected by regulatory agencies.
She’s also proposing to freeze estate and corporate franchise tax rates at current levels, rather than phasing out those taxes by 2011, as planned. Those changes would boost revenues $19 million.