Politics & Government

Hope builds as state's budget gap shrinks

TOPEKA — Kansas' projected budget shortfall shrank on Monday, and officials said they hoped it was a sign that state finances are stabilizing after months of disappointing tax collections.

The Legislature's research staff estimated a gap of $433 million between anticipated revenues and the spending needed to keep state programs at current levels for the fiscal year that begins July 1. Last month, researchers pegged the shortfall at $467 million.

A key factor was better-than-expected revenues in March, with tax collections exceeding the state's official projection by $14 million, or 3.7 percent. From December through February, tax collections had fallen short of estimates.

But officials remained wary of reading too much into the March surplus. The state still is struggling to pay all of its bills on time, and Budget Director Duane Goossen confirmed it postponed paying $71 million in aid payments due to public schools last week until later this month.

"It's probably too early to know whether we've stabilized or not," Goossen said. "It's hopeful, but we're not sure yet."

The projected shortfall has varied from month to month, depending on how closely tax collections track with Kansas' last official fiscal forecast, issued in November. State officials and university economists are scheduled to meet April 16 to issue new revenue projections for the next fiscal year.

Senate Ways and Means Committee Chairman Jay Emler said he expects the projected shortfall to settle between $450 million and $500 million when that new forecast is issued. He said after that, he hopes it won't change much, month to month.

"My belief is that we may be stable," said Emler, R-Lindsborg.

Leaders of the Republican-controlled Legislature are split over whether the state should increase taxes to erase the projected shortfall, something favored by Democratic Gov. Mark Parkinson.

Senate leaders support raising taxes, and Emler's committee drafted a proposed budget requiring at least $330 million in tax increases.

But House GOP leaders oppose raising taxes. The House Appropriations Committee has endorsed a budget plan that would avoid an increase in the state's taxes. But it wouldn't replace $172 million in one-time federal stimulus funds for public schools, leaving local districts to raise property taxes to offset the loss.

Legislators failed to pass a proposed budget before starting their annual spring break last week. They'll tackle spending and tax issues when they reconvene April 28.

Meanwhile, the state should catch up on its bills because it will be collecting the bulk of its individual income tax payments, Goossen said.

The state has been delaying at least part of each month's aid payments to schools since November because it has faced a cash crunch at the start of each month. It also still owes $55 million of a $70 million payment toward school and government workers' pensions due Jan. 15.

But it hasn't delayed income tax refunds, something it was forced to do last year.