Kansas officials expected to issue more pessimistic revenue forecast as budget shortfall looms

Economic Indicators Associated Press

Republican Gov. Sam Brownback and the GOP-dominated Legislature will get new revenue projections that are expected to make the state's budget problems look worse and intensify discussions about trimming spending.

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Legislative researchers, members of Brownback's budget staff, Department of Revenue officials and university economists are meeting Monday afternoon to draft a new financial forecast for state government. It will revise revenue projections for the budget year that began in July and issue the first official numbers for the budget year beginning in July 2015.

The Legislature's nonpartisan research staff made unofficial predictions going into the meeting of a $14 million budget shortfall by July, compounding to $282 million by July 2016, because of disappointing tax collections in September and October. Brownback's administration already is looking for budget savings.

A new, more pessimistic forecast would cause the gaps between anticipated revenues and spending commitments to grow. The governor and legislators will be bound by the forecast in budgeting after lawmakers open their next annual session in January, and the state isn't allowed to run deficits.

The budget problems come after legislators enacted massive personal income tax cuts at Brownback's urging to stimulate the economy. The state has cut its top rate by 26 percent and exempted the owners of 191,000 businesses from income taxes altogether.

Senate President Susan Wagle, a Wichita Republican and Brownback ally, said she expects the new forecast to be more pessimistic because the nation's economic recovery has been weak. She said economic growth will be more robust — and help generate greater revenues for the state — when investors feel they can trust federal government leaders in Washington.

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But she also said of state forecasters, "When we passed the tax package, they underestimated the impact."

The current forecast, issued in April, projected that the state would collect just shy of $6 billion in general tax revenues during the current budget year. Legislative researchers' unofficial prediction for the next budget year, starting in July 2015, is those revenues would grow 3.6 percent, to nearly $6.2 billion.

The state budget calls for spending more than $6.3 billion in general revenues on public schools and state programs, depleting the state's cash reserves. And legislative researchers estimate that the cost of current commitments will rise to $6.45 billion in the next fiscal year.

The state cannot sustain the spending under existing revenue predictions, and disappointing monthly tax collections suggest those predictions might have been too optimistic.

"I expect some pretty bad numbers," Senate Minority Leader Anthony, a Topeka Democrat, said of the new forecast. "We're going to be in a pretty deep hole due to the income tax cuts."

But Wagle and other Republicans don't want to back off the tax cuts.

"We will, instead, be looking for ways to reduce spending," said Rep. John Rubin, a Shawnee Republican.

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Kansas Legislature: http://www.kslegislature.org

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