Posts tagged with Budget
Topeka — Senate Republicans on Wednesday proposed a 6.25 percent state sales tax rate and a 5.7 percent rate on food.
House Republican leaders said they would come back later this afternoon to tell the Senate what they thought of the plan.
The current state sales tax is 6.3 percent, but is scheduled to fall to 5.7 percent on July 1.
Republicans say they need to keep the sales tax higher to shore up state coffers — depleted by last year's income tax cuts — and to buy down more income tax reductions over the next six years. Democrats say the income tax cuts benefit the wealthy and will reduce revenue needed for essential state services.
Under the latest Senate proposal, itemized deductions would be eliminated over six years, except for charitable contributions. The standard deduction would also be cut to $5,000 from $9,000 for head of household, and to $6,500 from $9,000 for married filing jointly.
By 2018, income tax rates would be cut to 3.5 percent from 4.9 percent on the top rate, and to 2.5 percent from 3 percent on the bottom rate.
Agreement on tax changes is essential to getting movement on a state budget. Legislators are in the 89th day of the session. Earlier, GOP leaders said they wanted to finish the session in 80 days.
Topeka — State tax revenue is expected to decline more over the next fiscal year than it decreased during the three years of the Great Recession, according to new state fiscal estimates.
New revenue figures show that the state will receive $5.454 billion in tax revenue for the fiscal year that starts July 1— a decrease of $745 million from the estimated $6.199 billion in revenue during the current fiscal year, which ends June 30.
During the recession, tax receipts fell to $5.191 billion in fiscal year 2010 from $5.809 billion in fiscal year 2007. That's a decline of $618 million over a three-year period.
The bulk of the $745 million reduction in receipts over the next fiscal year includes $450 million less in income tax and $270 million fewer dollars in state sales tax.
The revenue estimates are compiled by the Consensus Revenue Estimating Group, which includes the state Division of the Budget, Legislative Research Department and three consulting economists from state universities.
Last year, Gov. Sam Brownback signed into law cuts in income tax rates, including exemptions from state income taxes on non-wage income for 190,000 businesses, and eliminating tax credits for low-income Kansans.
In 2010, facing record revenue declines, the Legislature approved raising the state sales tax from to 6.3 percent from 5.3 percent, and then allowing that rate to fall back to 5.7 percent after three years.
Saying he wants to avoid cuts to higher education, Brownback is now pushing to make the 6.3 percent sales tax permanent. Democrats say the tax plan signed by Brownback has produced a fiscal crisis.
Topeka — Last week's revenue projections by state fiscal officials showed little change in Kansas' revenue forecast. But budgetary storm clouds are right over the horizon.
The new numbers highlighted that next year state revenue will drop precipitously as the income tax cuts signed into law last year by Gov. Sam Brownback kick in.
The state will receive $6.2 billion in revenue during the current fiscal year that ends June 30. For the fiscal year 2014, which starts July 1, revenue drops to $5.45 billion, a 12 percent or $750 million decrease.
Brownback has stated that income tax cuts will boost the economy.
But House Democratic Leader Paul Davis of Lawrence said the revenue figures show the income tax cuts approved by Republicans aren't working.
"It shifts the tax burden almost entirely to the middle class and requires cuts to the public services that help the middle class thrive. The Brownback tax plan isn't working, and these negative projections are further evidence that it is not going to work in the future," Davis said.
The income tax cuts will reduce revenue to the state by $450 million in fiscal year 2014, which is a 15.8 percent decrease. The state sales tax, which is scheduled to fall from 6.3 percent to 5.7 percent on July 1, will produce $270 million less than the current year, which is a 12.3 percent decrease. Brownback has proposed keeping the sales tax rate at 6.3 percent.
Topeka — House and Senate budget writers on Tuesday remained at an impasse over funding of higher education.
The House has approved a 4 percent reduction to higher education while the Senate has proposed a 2 percent cut.
In addition, the House has proposed other cuts from job vacancies, salary caps and other changes for a grand total of $63.35 million in reductions, compared with the Senate's cut of $21.25 million.
On Monday, Kansas University Chancellor Bernadette Gray-Little met with House Speaker Ray Merrick, R-Stilwell, and other House leaders to talk about higher education funding.
Higher ed officials pointed out that a recent national report noted that recent cuts in higher education have led to steep tuition increases.
States are spending $2,353 or 28 percent less per student on higher education in the current fiscal year than they did in 2008, when the recession hit, according to the Center on Budget and Policy Priorities.
During that period, tuition has increased $1,850, or 27 percent, the study said.
"Reversing these trends and reinvesting in higher education should be a high priority for state policymakers. A large and growing share of future jobs will require college-educated workers," the study said.
Gov. Sam Brownback has proposed keeping higher education funding at its current level.
Topeka — The House and Senate budget conference committee today started negotiations and the House stood by its proposal to cut higher education funding by 4 percent.
The reduction would mean a nearly $10 million cut to Kansas University.
The Senate has proposed a 2 percent cut.
While the Senate plan has a smaller cut, it also reduces the state's student financial assistance programs by $437,832. The House plan doesn't cut those programs.
The House and Senate also differ on proposals to fund a medical education building at KU Medical Center.
The House agrees with Gov. Sam Brownback's plan to provide $3 million in the next fiscal year to jump start construction of the building. The Senate plan would allow KU to use funds for the project that are generally allocated to take care of deferred maintenance and repairs on university buildings and facilities.
Topeka — As legislators gather today for the start of the 2013 session, one of the main budget issues is whether to make permanent the 6.3 percent state sales tax, which under current law is set to fall to 5.7 percent on July 1.
Gov. Sam Brownback, a Republican, has talked about the possibility of extending the 6.3 percent levy as the state grapples with budget shortfalls caused by income tax cuts he signed into law.
But if he wants to do that, he may not get any help from Democrats.
In the depths of the "Great Recession," a coalition of Democrats and moderate Republicans in 2010 approved increasing the state sales tax from 5.3 percent to 6.3 percent to avoid deeper budget cuts .
Under the law, the increased rate holds for three years and then falls to 5.7 percent, with four-tenths of one cent going toward paying for transportation projects. Many of those moderate Republicans and Democrats who voted for the temporary sales tax increase were defeated at the polls.
Since Republicans hold significant majorities in the Legislature — 92-33 in the House and 32-8 in the Senate — it is possible to make the temporary sales tax permanent without Democratic votes. But that would require the votes of some Republicans who have pledged to oppose tax increases.
"There isn't any amount of political spin that the governor or those legislators who adamantly opposed the sales tax increase can put on this. If they want to extend the tax increase, it is a tax increase pure and simple," said Senate Minority Leader Anthony Hensley, D-Topeka.
Asked if Democrats might face the dilemma of cutting programs they support or voting to extend the tax, Hensley said, "Sam Brownback wants to extend the sales tax to pay for his income tax cut. Let there be no misunderstanding about this at all."
Even last year, Brownback had proposed that the state keep the 6.3 percent rate to offset income tax cuts.
He has argued that cutting income taxes does more to stimulate the economy than lowering the sales tax.
Keeping the sales tax at 6.3 percent would raise approximately $250 million for the fiscal year that starts July 1. The gap between current state spending and projected revenue for the next fiscal year is already weighing in at $700 million.
Brownback doubts overall funding increase for higher ed, but sees additional dollars for specific projects; Governor also sees opportunities for the state in federal budget mess
With state revenue shortfalls looming, Gov. Sam Brownback on Thursday said there was little chance of an overall spending increase for higher education.
But in a talk with the Kansas Board of Regents, Brownback said the possibility existed to provide additional dollars for specific projects at the schools.
"I really don't think the time is appropriate with the Legislature or with me to ask for base funding," increases, said Brownback.
Brownback, however, said he and the Legislature are focused on trying to target funding for specific projects or programs, such as technical education.
Regents Chairman Tim Emert said Brownback has delivered the same message before and the board has adjusted its "ask" downward.
"We've kind of reached the point that we just hope that we can hold our own and keep funding where it is in this very difficult economic time," Emert said.
In September, the board sent Brownback a recommended $47.1 million in additional funding, which would be about a 6.2 percent increase.
Brownback will work on a state budget later this month to present to the Legislature when the 2013 session starts in January.
Brownback's administration has told state agencies to prepare for tight budgets, and has directed them to include a 10 percent cut in their spending requests for the next fiscal year, which starts July 1.
And the most recent revenue estimates show the state faces a $327 million revenue shortfall, mostly because of tax cuts Brownback signed into law.
The state is decreasing its individual income tax rates for 2013, with the top rate dropping to 4.9 percent from 6.45 percent. Also, the state will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes.
Included in the proposed $47.1 million increase in higher education funding is $2.8 million to improve the Wichita campus of the Kansas University School of Medicine, and $1 million as part of a proposed $30 million in state funds to pay for a new health education building at the KU Medical Center in Kansas City, Kan.
Also part of the higher ed wish list is a 1 percent pay increase for the 18,000 employees working on university campuses.
KU Chancellor Bernadette Gray-Little said Brownback made it clear that any increase in the base funding for higher education was probably not going to happen.
But Gray-Little said she was encouraged by Brownback's re-stated belief in the importance of higher education and "the value and ability of higher education to make a contribution, specifically to job creation, training highly skilled workers, and providing the intellectual energy for the kinds of things that need to happen here in Kansas."
In his comments, Brownback also said he sees opportunities for the state to benefit from the federal government's fiscal problems.
With the federal government's lack of resources, Brownback said the state is negotiating with the feds on Kansas taking a more active role in securing ownership in intellectual properties that spin off the proposed National Bio and Agro-Defense Facility.
He also said the state is negotiating to purchase water storage in federal reservoirs. And he said the state should also investigate whether it could offer to take over some of the prison and military training services at Fort Leavenworth.
"The feds are in a negotiating mood. They need to be because they are out of money," he said.
Asked later where the state, which is projected to see tax revenues drop sharply because of the tax cuts, would come up with the money to do this, Brownback said, "You got to prioritize."
He also said Kansas should become the intellectual center to develop policies to combat human trafficking.
And he called on higher education institutions to produce more entrepreneurs. "We don't have enough start ups in Kansas," he said. "We are toying with the idea of how can you pay the system to encourage more start ups."
The tax cuts signed into law by Gov. Sam Brownback are starting to show up big time in the form of reductions in projected revenue needed to run state government. That could mean significant budget cuts ahead.
On Tuesday, state financial experts met to determine the amount of revenue available for legislators and Brownback to make budget decisions next session.
The group's revised projection of $6.17 billion for the current fiscal year is 3.8 percent less than receipts in the last fiscal year.
But the revenue estimates take a deeper hit in fiscal year 2014, when the tax cuts are fully implemented. At that point, the state is expected to collect $5.46 billion, which is nearly $1 billion less than current revenue levels.
Does that mean deep budget cuts, tax increases or a combination of the two will be needed to bridge the revenue shortfall?
Not necessarily, said Brownback's Budget Director Steve Anderson.
"We don't anticipate cuts near that amount," Anderson said.
The Brownback tax cuts will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes. The package also decreases individual income tax rates for 2013, with the top rate dropping to 4.9 percent from 6.45 percent, and increases the standard deduction.
Brownback said the cuts will grow the economy. But House Democratic Leader Paul Davis of Lawrence said the new revenue estimates are more evidence "that Gov. Brownback's tax plan has put Kansas on the path to bankruptcy. As the rest of the country inches its way out of the recession, Kansas will face yet another devastating budget deficit."
At the news conference of the Consensus Revenue Estimating Group, Anderson repeated Brownback's vow to protect public school funding, which makes up half the budget.
Mark Tallman, a lobbyist with the Kansas Association of School Boards, said he was glad to hear Anderson's comments to on school funding but he noted, "To do that you would have to make very deep cuts in other areas of the budget or find additional revenues."
But Anderson said other variables exist.
The state has a healthy ending balance currently that could be used to cover some expenses, and Brownback has said he has not ruled out proposing to make permanent the temporary sales tax increase, although Republicans and Democrats have voiced opposition to that idea.
Anderson has directed state agencies to prepare budgets that include a 10 percent cut as a contingency plan in case something happened that cratered the economy.
He said unrest in the Middle East and economic problems in Europe have to be considered. "It would be naive for us to believe that we are an island that would not be affected by a meltdown in Europe," he said.
Asked if he thought the new revenue projections indicated the tax cuts were too big, Anderson said it might have been better to spread the cuts over a longer period of time, but that he was confident the plan will work.
Raney Gilliland, director of the Kansas Legislative Research Department, said there are many economic uncertainties, and that the state is experiencing slow economic growth.
The recent drought, Gilliland said, has had a negative impact on agriculture, and oil production because of the lack of water to use in horizontal drilling.
Kansas Department of Children and Families Secretary Phyllis Gilmore will meet with community leaders and DCF staff in Lawrence on Thursday as concerns continue to rise about next year's budget.
Gilmore, Deputy Secretary Kathe Decker, Deputy Secretary Anna Pilato and DCF Family Service program directors are scheduled to be at the Lawrence DCF office, 1901 Delaware, at 9:15 a.m.
I plan on covering the visit. Douglas County residents probably recall that Gilmore's predecessor Rob Siedlecki had proposed in July 2011 that the agency — then called the Kansas Department of Social and Rehabilitation Services — shut down offices in Lawrence and several other towns as a cost-cutting move. That plan was later abandoned by the administration after a huge public outcry.
But this year, Gov. Sam Brownback has directed state agencies propose 10 percent cuts when submitting their budget requests. Brownback has said the directive is part of the budget planning process.
Gilmore has said she has complied with the directive by proposing cuts to operational and administrative costs. Gilmore and her group also plan Thursday visits at DCF offices in Overland Park, Kansas City, and Leavenworth before hitting Atchison, Hiawatha and Concordia on Friday.