Kansas faces another budget gap, memo says

Kansas faces another budget gap despite two years of cuts, according to the state’s nonpartisan Legislative Research Department.

The state is projected to have $5.6 million in its general fund by the end of the fiscal year in June, according to the memo from Legislative Research that was distributed to lawmakers on Wednesday.

That’s if the state hits revenue estimates for the fiscal year. The memo does not take into account that the state missed revenue estimates by $26 million in July and August, the first two months of the fiscal year. If that revenue shortfall is included, the state already faces a $20 million budget hole.

The state’s budget director last month asked state agencies and universities to study the possibility of a 5 percent cut. That cut appears more likely now.

Gov. Sam Brownback’s office would not say on Wednesday whether the governor plans to proceed with any budget cuts.

“The Governor will present his budget proposal to the Legislature when it returns in January,” Eileen Hawley, the governor’s spokeswoman, said in an e-mail.

If the projected ending balance is already in the red, Brownback has a responsibility to act before January, said Senate Minority Leader Anthony Hensley, D-Topeka.

“I don’t know that they can delay this until the first of the year. He’s got to own up and take some responsibility here,” Hensley said.

“He’s going to probably have to cut into public safety and K-12 public education. I don’t know where he finds the resources to balance the budget,” Hensley said. “We’ve hit the iceberg and the ship of the state is sinking. … And he’s the captain of the ship.”

Rep. Ron Ryckman, R-Olathe, the House Budget Committee chairman, said the state needs to balance its books.

“The independent, nonpartisan audit conducted earlier this year proved that we can do that by managing our resources better and making government more accountable. The audit found real reforms that the next Legislature should look to enact,” he said in a message.

The audit, conducted by the consulting firm Alvarez and Marsal and released in January, said the state could save $2 billion over five years through an array of policy changes.

However, lawmakers pursued relatively few of those ideas during the most recent legislative session.

Impact of school funding ruling

The memo was released the same day that the Kansas Supreme Court heard arguments on whether school spending is unconstitutionally inadequate. If the court upholds a ruling from a lower court, the state will have to spend $800 million more on schools.

The state had previously projected that it would have an ending balance of $77 million for the year. But it had to defer some expenses to this year after revenue came in below expectations during the past fiscal year.

Those delayed payments, including $75 million to schools, have been added to this year’s budget and cut into the ending balance.

The budget news, which comes 47 days before the general election, will heighten the debate about the state’s finances that has dominated legislative races this year. Many analysts blame income tax cuts that were ushered into law by Brownback for the state’s financial troubles in recent years.

“We’ve got to fix this,” Rep. Nancy Lusk, D-Overland Park, said when looking over the memo on Wednesday afternoon. “We’ve got to get out of the hole, and I don’t think we will unless we make some dramatic changes to the makeup of the Legislature.”

Scott Drenkard, an analyst for Tax Foundation, a think tank that studies tax policy based in Washington, D.C., said the state’s spending ledger and tax ledger do not match up. He said policymakers need to fix that if they want to return the state to sound financial footing.

“I’m not going to pretend to know more than a Kansas resident about how many services they need, but you have to make those two ledgers match up. … It’s a real bummer to pay for stuff, but we all have to,” Drenkard said.

This story was originally published September 21, 2016 at 2:54 PM with the headline "Kansas faces another budget gap, memo says."