Kansas lawmakers begin weighing demands on state’s $100 million revenue surplus
photo by: Peter Hancock
TOPEKA – A group of Kansas lawmakers on Wednesday began thinking about all of the competing demands they will face in the next legislative session over how, or whether, to spend the nearly $100 million in unexpected tax receipts the state has received so far this fiscal year.
After a number of years of persistent revenue shortfalls that followed after the massive 2012 tax cuts enacted during former Gov. Sam Brownback’s administration — tax cuts that have since been reversed — the state of Kansas now finds itself in a position that many younger lawmakers have never known in their careers: revenue surpluses.
On one hand, lawmakers said Wednesday that they knew the years of shortfall forced large cuts in many state agencies and programs, including higher education, funding for the state’s pension system and funding for highways. They also know they have not yet fully satisfied the Kansas Supreme Court’s requirement to adequately funding K-12 education.
On the other hand, there is still a strong desire, at least among many Republicans, to pass tax legislation that failed in the 2018 session aimed at returning to taxpayers the “windfall” that Kansas expects to receive as a result of the federal tax cuts that Congress enacted late last year.
And then there is the unanswered question that nobody will know until after the Nov. 6 general election.
“It kind of depends on what occurs during the governor’s race,” Rep. Troy Waymaster, R-Bunker Hill, who chairs the House Appropriations Committee, said during an interview.
Sen. Laura Kelly, the Democratic candidate for governor, has said she would push for more investment in K-12 education and infrastructure if she is elected governor, while Republican candidate Kris Kobach, the current secretary of state, has said he would push for tax cuts while scaling back the size and scope of state government.
Waymaster and other lawmakers were in the Statehouse Wednesday for a meeting of the joint Legislative Budget Committee. That group includes top members of each chamber’s budget and tax committees. It meets periodically between legislative sessions to receive updates on the state’s revenue picture and ongoing projects being carried out by state agencies.
On Wednesday, the panel heard a report, which was announced earlier in the week by the Kansas Department of Revenue, that for the first quarter of the current fiscal year, total tax receipts flowing into the state general fund have come in $98.6 million higher than expected.
Waymaster said he hoped lawmakers would revisit a tax bill from the 2018 session, but he expected many lawmakers would want to push for more spending. If that’s the case, he said he would urge lawmakers to move cautiously.
“I want to be very cognizant of the fact that in our current five-year profile, the state is looking at a deficit situation at our current spending level, so I don’t want to add any more spending, unless it’s direly needed,” Waymaster said.
The long-term projections do show the state falling into a deficit in future years, largely because of the school funding package lawmakers passed in the 2018 session that phases in a $500 million increase in annual school funding over five years.
But other lawmakers have cautioned that those long-term projections rarely prove to be accurate because they are based on a number of assumptions, including economic growth and future state spending needs that are difficult, if not impossible, to predict.
Meanwhile, other lawmakers said there would be intense pressure on them to restore many of the funding cuts that have taken place in recent years.
“The demand is pretty great because you have the need to respond to the court for school finance, you’ve got payments to repair (delayed payments to) KPERS; you’ve got funding sweeps out of KDOT. These are all legal obligations that we have already existing,” Rep. Melissa Rooker, R-Fairway, said in a separate interview.
Rooker also said she thought lawmakers should be cautious about enacting tax cuts without first knowing what the actual impact of the federal tax law changes would have in Kansas.
“Part of the challenge with the timing of that bill was the utter lack of information about what the actual values were,” she said. “We need to have very good data before we move forward on any decisions.
Rooker is not a member of the joint budget committee, but she does serve on the House panel that largely wrote the school finance plans that lawmakers passed in 2017 and 2018. The Kansas Supreme Court has largely accepted those plans but said earlier this year that lawmakers still needed to add more money to the plan — an estimated $364 million over four years, or about $90 million a year — to account for the cost of inflation over the full length of the plan.
Meanwhile, Rep. Kathy Wolfe Moore, of Kansas City, the ranking Democrat on House Appropriations, said in an interview that answering the Supreme Court would be lawmakers’ first priority, but she agreed with Rooker that the state still faced a number of challenges.
“There’s been quite a bit of damage to our agencies over the years,” she said. “I’d probably be an advocate of continued funding to bring community mental health centers up to at least the level they were 10 years ago.”
She also said she hoped lawmakers would be careful before enacting any new tax cuts.
“I think we first have to see where the finances will play out with the federal windfall,” she said.