TOPEKA — Kansas officials on Wednesday slightly reduced their projections for state revenue during the current fiscal year, and a top aide to Gov. Sam Brownback said the state will still be able to sustain its budget.
The officials issued a new fiscal forecast to guide Brownback and the Legislature in making budget decisions into the spring. The latest forecast predicts that the state will collect $5.86 billion in revenue, while the old forecast, made in April, had projected revenue of $5.89 billion. The decrease is $29 million, or 0.5 percent.
The new forecast also includes the first official revenue projections for the fiscal year that begins in July 2014, estimating revenue of $5.92 billion, representing growth of $61 million, or 1 percent. The total is close to the unofficial, rough figure legislative researchers had included in documents prepared for lawmakers as they made budget and tax decisions this past spring.
Legislators this year approved spending plans for both the current and next fiscal years, and the forecast issued Wednesday suggested that the state won’t have to make major adjustments.
“If numbers come in significantly different than what they used when they passed the budget last year, that’s a big problem,” Jon Hummel, the governor’s acting budget director, said during a news conference. “We’ll be able to honor all of those commitments.”
But the new fiscal forecast didn’t dampen the debate over massive personal income tax cuts enacted by legislators at Brownback’s urging to stimulate the economy.
The state collected $6.34 billion in revenue during its previous fiscal year, and with the tax cuts fully in effect, revenue during the current fiscal year are projected to be 7.6 percent lower. Senate Minority Leader Anthony Hensley, D-Topeka, said the expected drop is proof that the tax cuts will decimate the budget.
House Minority Leader Paul Davis, D-Lawrence, who’s entered next year’s race for governor, said in a statement: “These projections demonstrate that Governor Brownback’s tax plan was fiscally irresponsible and damaging to our state.”
The fiscal forecasters included legislative researchers, members of Brownback’s budget staff, Department of Revenue officials and university economists. The new forecast, like the one issued in April, presumes that that the national economy will continue to see modest improvement.
Last year, Brownback publicly predicted that the income tax cuts would be “a shot of adrenaline to the heart” of the state’s economy, encouraging business investment and hiring. Hummel said it’s still too early to measure the effects of the tax cuts, though he said the state is seeing job growth.
Forecasters are predicting that the state’s sales tax collections will grow by 2.9 percent during the next fiscal year and that compensating-use tax revenue will rise by 3.8 percent.
People and businesses pay the compensating-use tax on large items purchased out of state, and the Department of Revenue has said there are signs that companies are doing more purchasing. The tax cuts championed by Brownback exempted business owners from paying personal income taxes on their profit.
“Really, what we were aiming for with the tax cut was job creation,” Hummel said.