Kansas budget forecast sets up tough choices

TOPEKA | The new fiscal forecast for state government appears to be pushing legislators toward a difficult choice: cutting education funding or increasing taxes.

The forecast issued last week slashed revenue projections for the rest of the state's current fiscal year and for fiscal 2010, which begins July 1. Officials now project that the budget legislators have approved for the next fiscal year will result in a $328 million deficit.

The state constitution prohibits a deficit, which means the $13 billion spending plan must be revised, or more revenues must be raised, or both. Legislators return April 29 from their annual spring break with the budget the most pressing issue.

The size of the deficit makes funding for both public schools and higher education a target, because together they consume more than two-thirds of the state's general tax revenues. But any such effort is likely to meet with fierce opposition.

Gov. Kathleen Sebelius and fellow Democrats are backing a series of proposals that they contend will raise revenues without a general tax increase. There's some debate about some of the items, and even if legislators adopted all of them, it still wouldn't eliminate the projected deficit.

"We know this is probably going to be the toughest set of budget negotiations that the state has seen and probably one of the toughest economic challenges in a generation," said House Appropriations Committee Chairman Kevin Yoder, an Overland Park Republican.

Sebelius and legislators already have finished two rounds of work to keep the state's books in the black.

The first round involved the current budget, which had to be revised to keep it balanced. Sebelius and legislators made about $300 million in adjustments, a combination of spending cuts, accounting changes and other revisions.

In November, the forecasters had predicted the state would collect $5.77 billion in general tax revenue to help support its $13 billion-plus in spending. The latest forecast revises that projection downward by $235 million, to $5.53 billion.

The Legislative Research Department now projects the state will have $29 million in cash reserves on June 30. That's far less than the official target for cash reserves, which is about $460 million, but it's at least positive.

Sebelius and legislators fashioned a 2010 budget that made additional spending cuts but also packed the budget with federal stimulus funds to help protect funding for public schools and higher education.

Public school districts lost about 0.7 percent of their base state aid and 1 percent of their special education funding.

The higher education system took a round of cuts in the 2009 revisions but had a small part of it restored in 2010. It was just enough that the state Board of Regents said it could freeze tuition at state universities for a year if it remained unchanged.

In November, fiscal forecasters had said the state would collect $5.88 billion in tax revenues. Last week, the dropped the figure for anticipated tax collections by a whopping $509 million, to less than $5.37 billion.

"I think everything is on the table," said Senate Ways and Means Committee Chairman Jay Emler, a Lindsborg Republican. "It is really depressing."