Politics & Government

Kansas revenue expected to rise, but school funding demands loom

Kansas expects to collect about $222 million more than previously projected over the next two years, according to a new revenue forecast Thursday.

"More is better than less, but we shouldn’t quite throw a party yet," said state budget director Shawn Sullivan. "We remain cautious going forward."

The expected revenue growth would provide lawmakers additional money as they wrestle with how to respond to a Kansas Supreme Court ruling that found the state’s school funding formula inadequate. Still, it falls short of the $400 million to $600 million in additional school funding some say is needed to satisfy the court.

The forecast will guide the governor and Legislature during the budgeting process next year. The state is expected to take in about $102 million more in tax revenue during the current fiscal year, which ends in June. Estimates for next year’s tax collections were increased by $122 million.

After years of shrinking forecasts and budget cuts, Thursday’s forecast was the second this year to project rising revenue. State budget and legislative research officials produce forecasts in April and November each year.

Kansas is now projected to have an ending balance of about $280 million at the close of the current fiscal year and a $355 million ending balance in the next year. Those figures do not take into account any increased spending for schools.

The Supreme Court ruled the current funding formula inadequate in October. The justices gave the Legislature until the end of April to respond. Attorneys for the plaintiff school districts that have sued for more funding contend that up to $600 million in additional funding may be needed. The court has not specified an amount.

A school funding increase of that size would be about twice the amount of the projected ending balance next year, Senate Majority Leader Jim Denning, R-Overland Park, said.

"So we're still, we're in a healing phase, but to say that that ending balance, that's going to go to schools – that's the legislative process and we have many, many resource needs," Denning said.

The state has other future obligations, such as deferred pension payments that will come due, he said.

Sen. Laura Kelly, D-Topeka, said she hopes people don’t jump to the conclusion that the higher revenue projections means the school funding issue is solved.

"We have a lot of work to do," Kelly said.

Thursday’s forecast was the first since lawmakers raised income tax rates and ended a tax exemption for certain businesses over Gov. Sam Brownback’s veto. The changes were expected to bring in close to $600 million more in the 2018 fiscal year.

Asked if the Kansas economy is growing stronger or is flat, Sullivan called it mixed.

While some sectors of the economy are showing growth, others like agriculture and energy continue to struggle, he said. Projections for the amount of oil and gas severance tax the state expects to collect dropped by 11 percent this year and 20 percent next year.

Kelly said a lot is unknown at the moment.

"I hope that people take to heart the word caution that was used in (Sullivan’s) explanation of these estimates," Kelly said.

In a sign of that caution, revenue forecasters didn’t change the amount of expected individual income tax revenue – about $2.9 billion this year.

"We have infinite demands and limited resources," Denning said. "It's the legislative process that decides what resources get applied to. It's just that simple."

Jonathan Shorman: 785-296-3006, @jonshorman