Kansas slashes revenue estimate, announces budget adjustments

Kansas revenues for the rest of the fiscal year were revised downward $159 million Friday, a hit so stunning that Gov. Sam Brownback’s budget director immediately outlined budget adjustments.

The adjustments total $124 million and include a $48 million transfer from the Transportation Department, said Budget Director Shawn Sullivan.

The moves will allow the state to keep paying its bills. Asked if the state was in the red, Sullivan replied: “Depends on what you look at. We’re basically at zero right now, so yes.”

Raney Gilliland, legislative research director, said the more pessimistic revenue outlook was due to downturns in the farm economy and the oil and gas industry and continued disappointing sales tax numbers.

And the bad news on the revenue front will continue, officials said. The revenue estimate for fiscal year 2017 was cut by $194 million.

The new fiscal forecast updates one issued in April and revised in July. The forecasts are made by university economists, legislative researchers and officials in Brownback’s administration.

Sullivan said the adjustments for this fiscal year, which will include $14 million in cuts that require legislative approval in January, would result in an ending budget balance in June 2016 of just $5.6 million.

“We’ve drained” the state’s coffers, said House Minority Leader Tom Burroughs, a Democrat from Kansas City, Kan. “Drained by this administration to shore up their failed tax policies.”

Democrats and some moderate Republicans point to income tax cuts championed by the Brownback administration as the reason for the budget crisis. Faced with shortfalls earlier this year, the Legislature approved increases in sales and cigarette taxes.

“After the Legislature passed the largest tax increase in history, you think we’d have some stability in the budget,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat.

“There’s no question we have to go back into the 2012 and 2013 income tax cuts if we’re going to have any stability in the budget.”

Besides the Transportation Department funds, a $9 million transfer would come from the Children’s Initiatives Fund, which supports programs such as Early Head Start. Sullivan said the transfers would not affect road projects or early childhood programs this year.

Other adjustments made use of unexpected savings and lower expenditure estimates, including for teacher pension payments. The budget moves would not affect spending on K-12 education or higher education, Sullivan said.

The new revenue estimate includes $30 million expected from the state’s recent tax amnesty program, although the actual figures from the program won’t be known until mid-November, he said.

Sullivan said there were positives to note, including the state’s unemployment rate of 4.4 percent and an increase in the number of small businesses in the state.

But Stephanie Clayton, an Overland Park Republican, said the administration’s tax plan had failed to grow businesses, create jobs or increase the state’s population.

“On the contrary,” she said, “it has driven Kansas consumers over the border, decimated funding for transportation and economic development and sent the signal nationwide that our state is in chaos.”

This story was originally published November 6, 2015 at 5:44 PM with the headline "Kansas slashes revenue estimate, announces budget adjustments."