Higher education officials say they are getting worried about state budget situation
Topeka ? Higher education officials are getting worried about the state’s revenue plunge in April and May.
“If the June numbers come and follow the same trend, my guess is we ought to be very careful on how we spend money and might even want to plan ahead to make reductions,” said Kansas Board of Regents member Ed McKechnie.
Regent Shane Bangerter questioned whether the new revenue numbers would have an affect on tuition and other areas as schools start preparing budget requests.
State revenue in April dropped $93 million under projections, and May was worse — a $217 million fall.
Gov. Sam Brownback and his key aides say the two-month drop of $310 million below estimates was due to a temporary problem caused by federal tax issues, and that revenues will recover.
They argued Kansans decided to pay capital gains in tax year 2012 to take advantage of favorable federal tax rates that were set to expire Jan. 1, 2013. The anticipated tax increase at the federal level was averted by a last-minute deal reached by Congress and President Barack Obama.
But regents officials say they want to be briefed later this month on the revenue situation.
KU spokesman Jack Martin said the school continues to monitor the state and “will work in collaboration with the Regents as they provide guidance on the budget process.”
Democrats say the shrinking revenue is directly related to Brownback’s significant tax changes and will force severe budget cuts.
Democrats have been circulating a new revenue profile that shows the state sinking into deep deficits.
The profile was done by the non-partisan Kansas Legislative Research Department at the request of state Sen. Laura Kelly, D-Topeka, the ranking Democrat on the Senate budget-writing committee.
At her direction, the profile includes the tax revenue shortfalls of $310 million that Kansas experienced in April and May.
Projecting that shortfall through fiscal year 2015, which starts July 1, would leave the state with a reserve, or ending balance, of $56 million, which is less than one percent of the budget. Traditionally, the state aims at a 7.5 percent ending balance.
In the fiscal year that starts July 1, 2015, Kansas would face a $211 million deficit and the shortfall would balloon to more than $1.2 billion in 2018, according to the profile.
“This is a self-imposed budget crisis that has been caused by reckless and irresponsible tax policy,” Senate Minority Leader Anthony Hensley, D-Topeka.
Brownback’s tax changes include cuts in state income tax rates and measures exempting the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes.
Alarms are also being sounded by former state budget director Duane Goossen, who worked for Gov. Bill Graves, a Republican, and Govs. Kathleen Sebelius and Mark Parkinson, both Democrats.
Goossen said that because of Brownback’s tax cuts, he doubts there will be enough revenue in the fiscal year that starts July 1 to cover the budget.
“The Kansas revenue stream does not support current programs,” said Goossen, who is now vice president for fiscal and health policy for the Kansas Health Institute. “It now appears that the bank balance will be depleted before fiscal year 2015 is over,” he said.
Individual income tax collections for this current fiscal year through May are down $680 million, or 25 percent from the previous year.
Brownback’s acting budget director Jon Hummell said that June tax revenue numbers will provide a better picture of what will happen. He said the administration is confident that the next fiscal year’s budget can be maintained because of the state’s low unemployment rate and private sector job growth.
“All signs are the economy is growing,” he said.
Brownback’s spokeswoman Eileen Hawley said, “We have — and will continue — to fund the core functions of state government and support policies that grow our economy.”