Editorial: Why Kansas’ budget crisis isn’t over — even after a big tax increase
Maybe you’re like a lot of Kansans. You figured that after lawmakers recently passed $1.2 billion in tax increases over two years that the state was in solid financial shape.
Then came word that S&P Global Ratings, a major financial ratings agency, isn’t so bullish on Kansas after all — even with that big revenue boost.
The agency isn’t budging on its negative credit outlook for Kansas, saying the state faces an ongoing structural imbalance with its budget that’s “likely to persist.” (To be fair, another ratings agency, Moody’s Investors Service, did upgrade the state’s credit outlook to “stable” from “negative” in wake of the tax hikes, although it, too, cited long-term concerns with the state’s financial outlook).
“While the state has boosted ongoing revenues through income tax increases, appropriations also have increased, leading to the persistence of structural imbalance in the biennium,” S&P said in a report.
All that begins to suggest that the financial hole that Gov. Sam Brownback and his fellow conservatives dug for the state was every bit as gaping as we were told.
It also suggests that it will be years before Kansas has its financial house back in order. Years. It suggests resolving the budget crisis was such an enormous challenge that it couldn’t be accomplished in a single year.
It also suggests that — wait for it — more tax increases could be necessary in the years ahead.
Still, you wonder: How can the future financial outlook remain so murky even with such a sizable tax boost? For one thing, some of that tax increase will be eaten up by the $293 million increase over two years in school spending. That was in response to a March Kansas Supreme Court order that said spending on schools was so low as to be unconstitutional.
It’s not clear yet if that $293 million will be enough to satisfy the court. Plaintiffs in the ongoing school funding case insist that the figure is far short.
Also, the state continues to rely on a pair of piggy banks that too easily can be raided. One is the state highway fund; the other is the state pension system. The ugly truth is that even with the tax increase, the budgets for the next two fiscal years don’t balance without $830 million in highway fund transfers and a further delay of payments into the state pension system.
The state has gone back to those piggy banks over and over again in recent years. At some point, Kansas taxpayers will have to refill them. That’s the “structural imbalance” idea that the budget wizards talk about.
Kansas is back headed in the right direction. But it still has a long, long way to go.
This story was originally published July 13, 2017 at 5:45 PM with the headline "Editorial: Why Kansas’ budget crisis isn’t over — even after a big tax increase."