Just hours before the Senate debates a slightly altered version of Gov. Sam Brownback’s tax-cutting plan, State Treasurer Ron Estes urged lawmakers to ensure the state has a stout savings account so the state and local school districts can pay their bills on time.
Kansas is expected to end the fiscal year with a $533 million balance – or about a percent higher than the 7.5 percent ending balance prescribed in state law.
Brownback’s proposed budget could let that slide to 7.5 percent next year. And the drop in revenue expected as result of the tax-cutting plan Brownback signed last year could erode that quickly.
The governor says cutting taxes will spur business growth and improve the economy, which would mean more spending and an increase in sales and property tax revenue.
Under Brownback’s new proposal, however, state researchers project the state’s ending balance would fall to 6.8 percent in 2015 before hitting 0 sometime in 2018 if the state maintains only modest growth.
Estes, the former Sedgwick County treasurer, said the 7.5 percent year-end balance is typically one of the high points for the state’s account throughout the year.
He said two years ago, when ending balances dropped as the recession pinched revenues, the state delayed payments to school districts, forcing districts to find workarounds to pay bills.
That hasn’t happened since the summer of 2011, he said. But it could if ending balances fall, and he said it’s unclear what tax cuts and budget reductions lawmakers may ultimately approve.
“I don’t know exactly where each of them is going to end up,” he said.
While the Senate is poised to debate Brownback’s plan, the House is on track to discuss its own plan, which would lower rates at a slower pace but phase out some deductions instead of erase them and let the sales tax expire on time.