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Archive for Friday, August 21, 2009

Kansas budget cuts, deficit contemplated

August 21, 2009

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— Kansas’ budget director is asking agencies to look for an additional $250 million in future spending cuts, but also suggested Thursday that some legislators are too pessimistic about the state’s finances.

Budget Director Duane Goossen said he’s asked officials for proposals to deal with a 5 percent drop in available tax revenues during the state’s 2011 fiscal year, which begins July 1, 2010. But he said Democratic Gov. Mark Parkinson’s administration hopes to avoid such cuts.

Some Republicans in the GOP-controlled Legislature expect to make deeper cuts for fiscal 2011. They’re relying on projections from legislative staff showing the state facing a budget shortfall of $530 million for fiscal 2011.

But Goossen said those projections assume tax revenues fail to meet expectations for fiscal 2010 and grow by only 1 percent in fiscal 2011.

“I would say they’re being pessimistic,” he said during an interview. “There are a range of assumptions that you could plug in here, and we shouldn’t really be using a number like $500 million.”

State officials and university economists won’t issue an official forecast for 2011 — and the revenue predictions used in budgeting — until November.

But Senate Ways and Means Committee Chairman Jay Emler said he believes the legislative staff’s projections are realistic because of the economy and because Kansas typically lags behind other states in coming out of recessions.

Emler, a Lindsborg Republican, said of Goossen: “I hope he’s right, but I think he may be a little too optimistic.”

House Republican leaders are worried enough about fiscal 2011 to schedule Appropriations Committee meetings this summer and fall, with legislators out of session. Its first special meetings are Monday and Tuesday.

The state has seen four rounds of spending cuts in eight months to prevent a budget deficit from developing. In July, Parkinson made $160 million in adjustments under a law that allows the governor to take such action after legislators have adjourned for the year.

Parkinson acted after the state ended its 2009 fiscal year on June 30 with tax collections $124 million, or about 2.2 percent, less than anticipated and was forced to delay tax refunds and aid payments to schools by a month.

With the last adjustments, the fiscal 2010 budget has about $5.5 billion in spending financed with general tax revenues. That’s $639 million, or 10.4 percent less than in fiscal 2009, but Kansas used federal stimulus funds to backfill, holding the decline in funding to 4.6 percent.

Still, some agencies saw double-digit spending cuts and public schools lost $163 million, with their base state aid declining 4.8 percent.

House Speaker Mike O’Neal, a Hutchinson Republican, noted legislators have been too optimistic before and, “We’re trying to learn from that.”

But Goossen said the state has seen revenue growth coming out of past recessions. For example, in fiscal 2002 — following the Sept. 11, 2001, terror attacks — general revenues dropped nearly 7 percent but grew in fiscal 2003 by 3.3 percent.

Comments

Paul R Getto 4 years, 7 months ago

I would suggest people interested in this topic read the studies commissioned by the legislature: Hugo Wall School of Urban and Public Affairs Wichita State University http://www.ksrevenue.org/pdf/erosion_property_tax_base.pdf; http://www.ksrevenue.org/pdf/sales_tax_erosion_ks.pdf. Legislators need to revisit all the property and potential sales they have taken off the books in recent years. We probably don't need much of a tax increase, but we do need to get more people paying into the system. With 90% of the property and 75% of the sales taken out of the mix, the suckers are left to pay for the state's needs. Or, as Leona Helmsley once said, "only little people pay taxes."

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Bob_Keeshan 4 years, 8 months ago

It should be clarified that in Kansas legislative staff do not develop growth assumptions.

The assumptions are developed by legislators; the legislative staff then drafts projections based upon guidance from legislators.

It is disappointing to see GOP lawmakers hiding behind legislative staff as they ramble on about $500 million budget deficits. It isn't the legislative staff predicting such a deficit, it is the lawmakers themselves. They should have the courage to say so.

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