TOPEKA — Republican legislators who've argued that Kansas still has a spending problem and plenty of room to make state government more efficient should have opportunities to cut the budget next year.
The disappearance of federal stimulus funds creates a hole in the budget for the next fiscal year that will more than offset the revenues raised by this year's sales tax increase. Gov.-elect Sam Brownback has talked of curing a "structural deficit," eventually without moving money around to prop up the state's main bank account.
The incoming Republican governor has received a pessimistic scenario from legislative researchers, projecting a deficit of $492 million on June 30, 2012, the end of the next fiscal year.
Republicans increased their House majority in last week's election and, even better for the GOP's anti-tax wing, crippled the coalition of Democrats and dissident Republicans who passed the tax increase this year.
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Brownback has been cautious in discussing fiscal issues, saying he doesn't want to overreach. But he also wants to stabilize the budget and cut individual income taxes, a move he says will promote economic growth.
Brownback and legislators face more tough budget decisions despite multiple rounds of cuts in 2009 and this year's increase in the sales tax from 5.3 percent to 6.3 percent to prevent even deeper reductions.
To be sure, the latest fiscal forecast for Kansas, issued by state officials and university economists on Election Day, isn't so bad. The forecasters boosted projections for tax collections by 0.7 percent, then predicted 4.3 percent growth for fiscal 2012, which begins July 1.
Outgoing Budget Director Duane Goossen even produced a profile for the state general fund, Kansas' main bank account, that projected no deficit. It would require the state to transfer highway funds and gambling revenues into the general fund to lessen cuts in education or social services.
In the current budget, federal stimulus funds, coupled with state tax revenues, are sustaining about $6.18 billion in spending — 88 percent of it in education and social services. The state will lose $492 million in fiscal 2012 when federal stimulus funds disappear.
Another federal stimulus package seems highly unlikely. Another statewide tax increase is out of the question, too, with Brownback as governor.
Republicans will have huge majorities in both chambers — 31-9 in the Senate and 92-33 in the House. Republicans picked up 16 seats in the House, meaning that even with 20 or so dissidents remaining, fiscal conservatives ought to have enough votes to pass any budget they like.
For now, Brownback isn't talking about reducing social service benefits and is emphasizing that he wants to protect education funding as much as possible.
But even the most optimistic scenario before legislators will force them to make difficult choices, and the environment appears right in 2011 for some budget cuts.