The gloom surrounding Kansas’ ongoing budget woes intensified in a 24-hour period stretching from Monday to Tuesday.
These events make it crystal clear that Gov. Sam Brownback and the Legislature will have to make bold, decisive moves that require adding more revenue sources to the budget in 2017. But even more cuts to state programs could be required, too, possibly long before the governor’s planned annual budget plan emerges next January.
▪ On Monday afternoon, the Kansas Department of Revenue reported that the state’s budget gap had exploded to more than $60 million in just the first three months of the fiscal year that began July 1.
Kansas brought in $45 million less than predicted in tax revenues in September. Already, the puny $6 million general reserve fund once expected to remain in mid-2017 has been wiped out.
▪ On Tuesday morning, a task force endorsed by Brownback released recommendations on how to try to make the state’s notoriously unreliable revenue forecasts more accurate — while also unveiling the untenable idea of trying to hide bad news about the Kansas budget.
Specifically, the group said the state could end the public release of monthly revenue estimates. This is wholly out of step with transparent government, as Republican Rep. Stephanie Clayton of Johnson County quickly pointed out.
Brownback’s team had asked for the reports earlier this summer, and then refused to make them public. Recently, administration officials said the 5 percent cuts would not be requested of agencies.
But the extremely dismal revenue news released Monday could change that dynamic and put across-the-board reductions back in play. That would be among the worst ways to deal with financial challenges because these moves don’t establish priorities. Every state department could get slammed equally under this scenario, without looking at how crucial their functions are to the people of Kansas.
Senate President Susan Wagle, a Wichita Republican, lobbed a criticism at Brownback by saying, “In this situation, clearly the longer he waits (to act) the worse it gets.”
Later Tuesday, Wagle announced an even more aggressive stance, saying Senate Republicans would hold a news conference Wednesday about the budget and transparency in government.
The 2012 income tax cuts that slashed $650 million a year from a general fund budget of more than $6 billion are at the center of any discussion of how to put the state on a more stable financial footing. The cuts largely are to blame for creating the state’s crippling fiscal issues.
Many conservative Republicans do not accept that fact, including Brownback.
Sen. Steve Fitzgerald of Leavenworth said Monday: “We’re in a rough patch. And I think this rough patch is not being caused by any particular tax policy. This rough patch is being caused by the reduction in oil prices, gas prices, agricultural commodity prices.”
Yet while tax revenues for those sectors of the economy definitely have declined by tens of millions of dollars, that pales in comparison to the effect of the huge income tax revenue losses. Plus, a higher state sales tax has not brought in the predicted revenues, either.
A more realistic assessment came from Rep. Kathy Wolfe Moore, a Kansas City, Kan., Democrat, who said, “First thing we have to do is fix the tax plan and put the LLCs (limited liability corporations) back on the tax rolls. ... We have to do it to close the budget hole but we also have to do it as a matter of fairness.”
Notably, while Brownback and others have said the tax cuts didn’t affect the accuracy of the monthly revenue estimates, the leader of the governor’s consensus estimating group was upfront about the problem.
“In our opinion, when there’s a significant tax policy change, the system breaks down, and that’s exactly what we’ve been through in the state of Kansas the last four years,” said chairman Sam Williams.
The spate of negative news this week adds to the importance of the fast-upcoming fall elections.
In Johnson County, for instance, several moderate Republican candidates in the August primaries ousted conservative supporters of Brownback. More of the governor’s allies could be dumped if Democrats and other moderate Republicans win on Nov. 8.
After these potentially major changes in the makeup of the Kansas House and Senate, the Legislature in 2017 will need to be ready to quickly deal with the state’s fiscal ills.
One last warning: The troubles could get even worse if revenue reports for the months of October, November and December show continued problems. A dark cloud could be hovering over the Sunflower State for many more months to come.