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Archive for Sunday, December 27, 2009

Revenue numbers add up to unprecedented budget crunch

December 27, 2009

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Those of us who have been covering the budget crisis have been inundated with statistics.

Sometimes, because of deadlines, there isn’t time to include all the interesting factoids that come up. Here are some from recent budget discussions that haven’t gotten much attention but show what a financial mess the state is in.

Since 1966, the modern era of state budgeting, the state’s all-purpose general fund, which is where most state taxes collect, has decreased from the previous year three times — 1986 by 1 percent; 1999 by 1.1 percent; and 2002, by 6.9 percent, which was the post-9/11 recession. That information is provided by the Kansas Legislative Research Department.

In each of those years, however, revenues rebounded in the next year.

During the current crisis, fiscal year 2008 was 2 percent below 2007. Then, fiscal year 2009, which ended June 30, was 1.9 percent below 2008.

That is the first time revenues have fallen two years in a row. The state projections estimate that 2010, the current fiscal year, will be 5.2 percent below 2009, and 2011 will be 2.3 percent below that. If that happens, that will be an unprecedented four years of decreasing revenues, an estimated $630 million drop or 11 percent.

The tanking revenue situation has produced a new term — retro-budgeting — because many state agencies are facing 2010 challenges with 2006 levels of funding.

Higher education is a perfect example of this. Funding for the current fiscal year is $747,064,138, which is to the dollar what higher education received in 2006.

Speaking of 2006, there has been an interesting evolution in discussions at the state level of how much public school funding can be cut without jeopardizing federal stimulus funds. Under the American Recovery and Reinvestment Act, states received funds to prop up their budgets but had to maintain education funding at 2006 levels.

But what exactly is the 2006 level?

Public school funding is based on a complicated formula that includes many components, and it is different from state to state. The state education agency says that Kansas schools have already been cut down to the 2006 level.

Gov. Mark Parkinson’s budget director, Duane Goossen, said the 2006 level “can be defined in a variety of ways.”

But, Goossen added, “The bigger question is, should education be cut back further?”

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