Editorial: Disappointing news

New reports don’t bode well for the Kansas economy or state revenues.

Three reports released last week painted an ongoing discouraging picture of the Kansas economy.

On Thursday, the Kansas Department of Revenue reported another shortfall in state tax revenues. In September, the state brought in $534 million in taxes, about 5.5 percent below the forecasted $565 million. That adds to a cumulative shortfall for the first quarter of the state’s fiscal year. Since the fiscal year began in July, tax collections have been $1.37 billion, which is $67 million or about 4.7 percent short of expectations.

This trend obviously doesn’t bode well for the state. The budget approved for the fiscal year is based on predicted tax revenue for the year. If revenues continue to fall below the predictions, the state may once again be forced to make arbitrary midyear cuts to meet its expenses.

When revenues fell below expectations in August, state officials blamed it on unexpectedly large income tax refunds paid out during the month. For September, officials pointed to a dip in farm income and declining energy prices, which reduced taxes collected on income and on oil and gas productions.

Those factors also were cited in a couple of disappointing economic reports released last week. Wichita State University’s Center for Economic Development and Business Research reported that the Kansas economy is growing much more slowly than in the rest of the nation and likely would remain sluggish next year. While the nation’s employment rate increased by 2.1 percent in the last 12 months, the Kansas employment rate rose by just 0.9 percent, according to the WSU report.

Another report that included nine Midwestern and Plains states also indicated a slowdown in the region’s economy. The Mid-American Business Conditions index dropped from 49.6 in August to 47.7 in September. Kansas saw a similar decrease from 48.2 in August to 47.1 in September. Any score below 50 indicates economic decline. Missouri’s index slipped slightly but stayed in positive territory with a score of 50.5.

Kansans still are waiting for some good financial news. Higher sales and cigarette taxes were supposed to shore up state tax revenues; lower income taxes were supposed spur more jobs in the state. Neither of those strategies is working, and the state is running through its cash reserves and perhaps heading toward another budget crisis. Gov. Sam Brownback keeps saying the state just needs to “stay the course,” but for how long?