Kansas tax collections nearly $54M below expectations in February; universities face millions in cuts
Topeka ? Revenues flowing into state coffers fell $53.6 million short of expectations in February, creating a budget deficit for the current fiscal year that will likely force further budget cuts and possibly delay payments out of the state general fund.
Gov. Sam Brownback responded immediately by saying he has notified Board of Regents universities that he is implementing a 3 percent, or $17 million, “allotment” cut.
For Kansas University a 3 percent cut would mean about $4 million, and for KU Medical Center it would mean about $3.2 million, said Tim Caboni, KU’s vice chancellor for public affairs.
However, Kansas Board of Regents spokeswoman Breeze Richardson said the board will have to decide how to allocate the $17 million cut among the six state universities. The board is expected to make that decision by the end of the week, she said.
The news came barely two weeks after state lawmakers passed a budget bill that was supposed to leave the state with a projected $6 million ending balance, out of more than $6 billion in spending.
But the February numbers immediately changed that $6 million balance into a $47 million deficit, and that doesn’t even include additional money for school finance to satisfy a recent Kansas Supreme Court ruling, which Department of Education officials say could cost yet another $73 million.
According to the Kansas Department of Revenue, individual income taxes came in $27 million below expectations, and $19 million lower than February 2015.
Retail sales taxes were $12 million short of official estimates, while corporate income tax came in $7 million short.
“After seeing several months of individual income tax growth and strong withholding, we’ve had a decline in February, which shows that Kansas, as many Midwestern states, is facing a downturn in the oil and gas sectors of the economy,” Revenue Secretary Nick Jordan said.
Democrats, who have blamed the consistent shortfalls this fiscal year on the massive tax cuts that Brownback and the GOP-dominated Legislature pushed through in 2012 and 2013, blamed them again for the latest shortfall.
“For months, Democrats have called on Gov. Brownback and his Republican allies in the Kansas Legislature to end the economic experiment,” said House Minority Leader Tom Burroughs, D-Kansas City. “The revenue numbers released today reveal the true damage of their fiscal mismanagement.”
Senate Minority Leader Anthony Hensley, D-Topeka, predicted the shortfall, “will force the shutdown of our schools next fall — a disaster that (Brownback) and his legislative allies will be solely responsible for.”
Brownback, however, rejected those criticisms.
“This is an economic problem, not a tax policy problem,” he said in a statement. “Our tax policy has been instrumental in creating more than 80,000 jobs since we took office and has resulted in a record number of Kansans working.”
He also ruled out any idea of reversing those tax cuts, and specifically the one that exempts more than 330,000 business owners from paying taxes on business income, to fix the budget deficit.
“In balancing the budget, I will not support or call for a tax increase on small business in Kansas,” he said. “My focus is on managing spending, not on raising taxes. Our goal is not to fund the growth of state government; it is to help the Kansas economy grow.”
Senate President Susan Wagle, R-Wichita, also ruled out the possibility of tax increases, but said she prefers across-the-board budget cuts instead of targeted cuts to specific agencies.
“The reduction will be small when equitably spread across the board,” she said. “Governors and business owners have taken this responsible approach to keep their doors open and their states solvent. Taxpayers are not in the mood for another tax increase; we must further reduce spending.”