Kansas revenue forecasters raise this year’s estimates by $306 million

photo by: AP Photo/John Hanna

Raney Gilliland, right, the director of the Kansas Legislative Research Department, discusses a new, more optimistic fiscal forecast for state government during a news conference, Friday, Nov. 9, 2018, at the Statehouse in Topeka. To his left is Larry Campbell, budget director for departing Republican Gov. Jeff Colyer.

TOPEKA — Gov.-elect Laura Kelly will have a lot more money to work with when she comes into office than previously estimated, at least for the first six months.

State revenue forecasters on Friday raised their estimates of the current fiscal year’s total receipts by $306 million, or about 4.4 percent above the previous estimate.

That, however, is not due to any great growth in the Kansas economy. Rather, they said, it’s that Department of Revenue officials in the Brownback administration underestimated the impact of both the tax cuts that he championed in 2012 and 2013 as well as the reversal of those tax cuts in 2017.

“They did not accurately reflect the reality,” Raney Gilliland, director of the Legislative Research Department, said during a news conference where the new estimates were released. “We can look back. Hindsight is 20-20, but at the time it was very difficult to calculate what those would have been.”

The numbers released Friday are known as consensus revenue estimates. They are produced by officials in the governor’s budget office, the Legislature’s research staff and independent economists from the University of Kansas, Kansas State University and Wichita State University.

Gilliland would not say whether the low estimates were deliberate. But the statement that officials had underestimated their impact directly contradicts statements Brownback himself made at the time, when the state was experiencing revenue shortfalls year after year, forcing him and lawmakers to make significant cuts to education, highway programs and payments into the state pension system.

Brownback blamed those revenue shortfalls on global economic forces beyond the state’s control that resulted in weakness in the Kansas farm economy and the oil and gas industries.

But Senate Minority Leader Anthony Hensley, D-Topeka, said he believed all along that the Brownback administration had deliberately lowballed the estimates.

“I absolutely believe it was intentional on their part,” Hensley said in an interview after the news conference.

Gov. Jeff Colyer, whose term expires in January, called the report good news and said it provides room for lawmakers to offer new tax cuts.

“This also puts us in a better position to give back to Kansans by lowering taxes, funding education, and making other critical investments in our state,” he said in a statement.

Kelly, however, has rejected the idea of any new tax cuts, at least during her first year in office. But she also released a statement saying she was pleased with the report.

“This is good news for our families and the state of Kansas,” Kelly said. “It reflects the bipartisan work of many lawmakers last year to end the Brownback experiment and put our state back on track.”

Going forward after this fiscal year, the forecast group said the state’s economy is not expected to grow much.

“Tapering off. Slowing down,” Budget Director Larry Campbell said about the state’s economic outlook in 2020 and beyond.

As a result, for the next fiscal year that begins July 1, the estimating group said total receipts are expected to fall about half a percent below this year’s level, and the following year they are expected to fall yet another half a percent.

But Gilliland said many unknown factors about the future could affect those estimates, including the impact of new tariffs imposed by other countries on U.S. exports, including agricultural products, as well as the possibility of another recession.

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