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Ron Estes: Tell whole story on state finances

  • Published Sunday, March 16, 2014, at 12 a.m.

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Edward Flentje left off part of the story on the state finances (March 9 Opinion).

It is correct that the state of Kansas started fiscal year 2011 with $876.05 in its checking account. I see a report every day showing the current daily balance and the beginning balance for the year, and I saw that number every day for six months after coming into office as state treasurer in January 2011.

Former Gov. Mark Parkinson, the Legislature and numerous elected and appointed officials had a difficult job guiding Kansas through the Great Recession. As Flentje noted, they increased the state sales tax by 1 cent, reallocated highway money to the state general fund and made various cuts in spending. But newly elected Gov. Sam Brownback and the new Legislature were still facing a nearly $500 million deficit in the projected budget for fiscal year 2012 despite the sales-tax increase. State payments to K-12 school districts and their respective contributions to the Kansas Public Employees Retirement System still couldn’t be made on time.

During the 2011 legislative session, some tough decisions were also made to resolve these issues and the fiscal year 2012 budget deficit was eliminated. As a result, all K-12 school payments since July 2011 have been made on time and in the full amount. All required KPERS contributions, including late payments, have been made as well. As a result of these changes, the Kansas checkbook ended fiscal year 2012 with a $530 million balance.

Now let’s look forward for the next two to three years. In 2012, the same Senate that had voted for the 1-cent sales tax passed an income-tax cut that Brownback ultimately signed. That bill cut income-tax rates starting in January 2013 with the intention of lowering income taxes to jump-start business investment and consumer spending. Ultimately, the goal was that after three to four years, tax receipts would grow larger than with the old, higher income-tax rates.

The state’s economy had stopped declining by 2010 and was showing signs of some small growth, but not enough. In 2013, with the lower income-tax rates, the Kansas economy was exhibiting more growth. In fact, the fiscal year 2013 ending balance in June 2013 was $764 million, which was $90 million more than forecast.

Some of the $90 million was due to the federal fiscal cliff, which led to a lump sum of money that will not be repeated. But actual tax receipts were also higher than estimated based on the size of the income-tax cuts.

As I mentioned, we are seeing some growth in the state’s economy. However, we need to see more. We started fiscal year 2014 with $764 million, and the income-tax reduction plan was to spend down that balance until the economic growth raises tax revenue back.

I am cautiously optimistic the economic-growth plan will work for Kansas, but I will continue to watch the state’s account balance over the next two years.

No one wants to ensure we have enough money in the state’s checkbook more than I do. My name is on every check, and I don’t want any to bounce.

Ron Estes is the Kansas state treasurer.

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