How quickly some forget.
On Friday, a new fiscal forecast from legislative researchers, university economists and officials in the governor’s administration was released projecting Kansas tax collections through June 2019 will increase by $534 million more than originally anticipated. The forecast includes extra revenues predicted to come from changes in federal income tax laws late last year that are expected to force some filers to pay more to the state.
Kansas Senate President Susan Wagle, a Wichita Republican, wasted no time calling for tax cuts. “The surplus from this unanticipated windfall should be returned to the Kansas taxpayers,” Wagle said.
But as nice as it is that forecasters expect Kansas to have excess tax revenues for a change, it’s a little early to start spending those funds. Tax cuts implemented in 2012 put Kansas into a financial hole it only began digging out of after repealing the cuts last year. And there are a number of significant fiscal questions facing the state, most notably funding for public schools.
Earlier this month, lawmakers approved a bill that gradually increases annual spending on public education by $530 million in five years. Although that may seem significant, it is far short of the nearly $2 billion per year in new funding that a consultant hired by legislators said is needed.
On April 30, the state will pitch its new plan to the state Supreme Court, which has already ruled Kansas’ current education funding is inadequate. If the court rules that the state’s plan remains inadequate — which isn’t a stretch — lawmakers will need some or all of the $540 million forecasted excess to keep public schools open.
Also, a new report released Monday shows that Medicaid and other social service programs will cost significantly more than originally estimated. The report, known as the “Consensus Caseload Estimates,” shows costs through June 30, 2019, are expected to exceed what was originally estimated by $109 million, mostly due to $93 million in costs for KanCare, the state’s privatized Medicaid program.
Also, the cost of operating the state’s foster care program is expected to grow nearly $6 million this year, plus another $12 million next year.
The Senate approved a package of tax cuts on April 7. The House is expected to take up the cuts after the wrap-up session convenes on Thursday.
No one wants to say no to tax cuts, but that could prove to be a risky move given the financial perils the state could face. Legislators would be wise to hold off on tax cuts until the school finance lawsuit is resolved and they’ve seen how accurate their forecasters’ projections are.