Kansas would eliminate a deficit in its current budget mostly by diverting highway funds and shifting other funds around to patch holes in the funding for general government programs under a bill approved Monday by a state House committee.
The measure that cleared the Appropriations Committee on a voice vote follows Republican Gov. Sam Brownback’s approach of making only limited spending cuts in the current budget to eliminate a projected shortfall exceeding $330 million – or about 5 percent.
The deficit is in the state’s main bank account, and the state can avoid it largely by diverting funds into that account from highway projects and other special funds.
The full House was expected to debate the measure Tuesday.
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The state’s budget problems arose after lawmakers cut personal income taxes at Brownback’s urging in 2012 and 2013 to stimulate the economy. The state dropped its top rate by 29 percent and exempted the owners of 191,000 businesses altogether.
The current budget runs through June, and Brownback’s budget director has said lawmakers need to approve adjustments by Feb. 13 for the state to continue paying its bills on time. House committee Chairman Ron Ryckman Jr. said with time short, moving money around is the best option.
“Our intent is to make sure that we can pay our bills on time,” said Ryckman, an Olathe Republican. “The short amount of time we had, we might have taken a battle-ax approach.”
The state faces an additional $436 million shortfall in its budget for the next fiscal year, which begins July 1, against about $6.2 billion in spending. But that figure could grow if lawmakers cover ongoing expenses in the current budget with one-time transfers of funds into the state’s main bank account, essentially pushing much of the current fiscal year’s problems into the next fiscal year.
Among other things, the bill would divert $158 million from highway projects into the state’s main bank account, to fund general government programs in the current budget. The state Department of Transportation said some as-yet-unidentified road resurfacing, highway reconstruction and bridge repair and replacement projects could be delayed.
The bill also captures $55 million in projected savings on prescription drugs for poor and disabled Kansans and uses them for general government programs. It diverts $12 million for special children’s programs into the state’s main bank account.
“About 90 percent of it is transferring,” Rep. Don Hill, an Emporia Republican and an Appropriations Committee member, said of the bill. “It does nothing for our structurally unbalanced fiscal situation.”
The projected shortfall in the current budget grew after the state Department of Revenue reported Friday that tax collections fell $47 million short of expectations in January. The department said it is processing income tax refunds more quickly than it did last year, so that February’s tax collections might bounce back.
But some lawmakers worry that tax collections will continue to fall short of expectations.
“I think they’re just putting a Band-Aid on the situation and hoping everything gets better,” said Rep. Jerry Henry, of Atchison, the Appropriations Committee’s ranking Democrat.
After the state lowered expectations in November, Duane Goossen, who served as budget director under the three governors before Brownback, said the state’s revenue projections were still unrealistic.
On Monday, he cast doubt on the administration’s claim that January’s underperformance was a fluke caused by an unusually high number of tax refunds.
“It seems like always an attempt to say something else is causing this when the real key thing is that the state has lowered its income tax revenue by a lot and it continues to fall lower and the state does not have a stable source of revenue adequate to cover its expenses,” Goossen said. “And that’s what you can take away from January.”
Contributing: Bryan Lowry of The Eagle