When legislators return to the Statehouse next week for a wrap-up session, they’ll have to pass a budget before they can go home.
That’s the only major task remaining after Gov. Sam Brownback signed a bill Monday that will spend millions on schools and property tax relief to meet a Supreme Court order.
Between additional education money and reductions elsewhere in the budget, the state is set to spend about $69.4 million more in fiscal year 2015 than the governor proposed in January. It is projected to have an ending balance of $384 million, or 6.1 percent of all expenditures, in 2015.
Statute says the state’s ending balance, the money left in the piggy bank, should be at least 7.5 percent of expenditures.
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Even before the court order for more education money, Democrats had been talking about projected budget deficits because of the governor’s tax cuts. The governor’s office did not release five-year projections when it released his budget recommendations in January, contending that projections beyond 2015 would not be reliably accurate.
Projections by the nonpartisan Kansas Legislative Research Department showed the state spending down nearly all of its reserve funds by 2016 before the new school funding was approved.
Sen. Ty Masterson, R-Andover, heads the Senate Ways and Means Committee, which had a special meeting Tuesday to hear the latest budget numbers. He said the state would be fine for next year but acknowledged that he was concerned about the years after that.
“You know 7.5 percent was an arbitrary amount. I think it’s probably more than enough. You know the Legislature routinely sets that aside. But I am concerned about the out years moving forward beyond. You know you get into ’16 and ’17 and see where we go from there,” he said after the meeting.
Masterson said he did not yet have an opinion on what the long-term solution would be.
“I think her opinion would be taxes,” he said, gesturing to Sen. Laura Kelly, D-Topeka, the committee’s ranking minority member, who sits to his left.
Kelly has been one of the most outspoken critics of the governor’s tax cuts.
“I think when all is said and done, we have absolutely no choice but to really take a very good look at our tax structure and redo some things,” Kelly said.
“You cannot take 46 percent of your budget revenue source and eliminate it, which is pretty much what we’re on the path to do with income tax cuts,” Kelly said. She also argued that it was unfair for small-business owners to pay no income tax, while their employees do.
Sen. Michael O’Donnell, R-Wichita, another committee member, compared the additional spending on education to dipping into a savings account to repair a house after a storm. He said Kansans shouldn’t be worried.
“Sometimes we have to dip into our savings account. That’s what we’re doing,” O’Donnell said. “A few years ago, there was virtually no money in the ending balance. … We’re dealing with hundreds of millions of dollars, so I think there is reason to still be optimistic having over 6 percent.”
Jon Hummel, the governor’s interim budget director, said last week that the tax plan was sustainable as long as spending remained under control. Hummel pointed to savings elsewhere in the budget as proof.
At Tuesday’s meeting, Legislative Research informed legislators that the KanCare program was on pace to cost the state $26.6 million less in 2014 than initially projected.
The research department also informed the committee that the welfare program Temporary Assistance to Needy Families would cost the state $4.7 million less than originally calculated in both 2014 and 2015.
The memo given to the committee stated these adjustments reflect “new program policies and the expectation that the Kansas economy will continue to improve.”
Kelly was skeptical that the state’s economy was strong enough to justify reduced need for the temporary assistance to families.
A March report from the Governor’s Council of Economic Advisors showed that Kansas was growing economically but at a rate behind neighboring states.
The Legislature passed a two-year budget last session, but lawmakers need to pass adjustments based on new agency needs and pass a Corrections Department budget for 2015, which Brownback vetoed last year.
The Senate has passed its budget proposal. The House has yet to vote on a budget for state government as a whole. But because it approved a budget for the Corrections Department, the two chambers could go into conference on the state’s budget as early as the Legislature’s first day back, Masterson said.