Topeka State fiscal experts Thursday said the Kansas economy remains stuck in recession, and that means a further drop in tax revenues and more budget cuts.
The Consensus Revenue Estimating Group met and revised downward the state revenue estimate for the current 2010 fiscal year by $235 million, a 4.2 percent drop from a previous projection.
Combined with additional costs as more people seek social services, and as more children enroll in schools and get lunch assistance, the budget gap has grown to $460 million. That would take an 8 percent across-the-board cut in state government to mend, officials said.
“The recession in Kansas is not over in the current fiscal year,” said Alan Conroy, director of the Kansas Legislative Research Department.
Gov. Mark Parkinson’s budget director, Duane Goossen, described the state as “at the bottom of the recessionary trough now, and we may linger there a little bit and then start to come up.” Officials pointed to the state’s jobless rate and low marks in consumer confidence as indicators of continued economic weakness.
An economic recovery could start as early as next summer, they said, but until then tough budget decisions must be made.
Parkinson promised to start making cuts before the legislative session starts in January.
In a statement issued by his office, Parkinson said, “To Legislators across Kansas, I say this: in the coming weeks, I will take whatever steps are necessary to balance the 2010 budget before the Legislature returns; that is a promise I have made, and it is a promise I will keep.” He urged cooperation “by acting like civil adults and working together.”
Those cuts will come by the end of the month after Parkinson returns from a trade trip to China.
“It’s a tremendous hole,” said state Sen. Jay Emler, R-Lindsborg, and chairman of the Senate Ways and Means Committee. “I don’t envy the governor at all on this one,” he said. There have already been four rounds of budget cuts this year, and Emler said more “effective programs” are going to be cut.
Public schools, which make up half of the state budget, will take a big hit.
Mark Tallman, lobbyist for the Kansas Association of School Boards, said damage to education will be “high” with cuts at the level needed to fill the hole.
The hit to public schools will take place right away. Parkinson’s budget director Goossen said the governor won’t even figure into the equation the $142 million in additional revenue that has been determined to be needed to help schools cover new costs for increased enrollment and a big increase in the number of students getting free or reduced price school lunches.
State officials are playing a balancing game with education funding because they have taken hundreds of millions of dollars from the federal stimulus package to prop up the budget. Under the federal law, the state must maintain public school and higher education funding at 2006 levels or it could jeopardize federal funding. Kansas is close to the line.
When lawmakers return, they will still face a budget out of kilter for the next fiscal year. Revenues for the fiscal year starting July 1, 2010, are already $122 million below the revised figure for the current fiscal year.
Emler said there will be pressure for tax increases. Republican legislative leaders have vowed to fight a tax increase.
House Democratic Leader Paul Davis of Lawrence blasted Republicans who dominate the Legislature.
“The people of Kansas need to brace for the consequences of this economic downturn and the billions of dollars worth of special-interest tax cuts that the Republican-controlled Legislature has passed over the last decade,” Davis said. “The result of this will be lower-quality schools, compromised public safety, health care being denied to our poorest citizens and thousands of Kansans unable to access state services.”
The $235 million downward revision from previous estimates is the result of slumping tax collections.
The revenue estimating group is composed of representatives of the Division of the Budget, Department of Revenue, Legislative Research Department, and one consulting economist each from Kansas University, Kansas State University and Wichita State University.