Kansans are going to be deluged with differing numbers about the state’s budget in the coming weeks as lawmakers try to figure out how to fill a multimillion-dollar budget hole.
Members of the House Appropriations Committee met Thursday to crunch numbers after the state’s revenue estimates were lowered Monday. A document prepared by the state’s Legislative Research Department showed a $131 million shortfall for the 2016 fiscal year, which starts July 1.
However, Rep. Mark Kahrs, R-Wichita, noted that figure is based on assumptions about tax legislation that lawmakers have yet to vote on. He repeatedly pressed to get a specific figure showing how big the budget hole is.
J.G. Scott, Legislative Research’s chief fiscal analyst, told Kahrs that without any additional revenue sources the state will fall $422 million short of zero next year. That hole will have to be filled with tax increases and spending cuts, and if lawmakers want to leave a positive ending balance they’ll have to surpass that mark.
The governor’s tax proposals would bring in about $211 million if every piece, including a massive tax hike on alcohol and tobacco, becomes law. A proposed fee increase on HMOs would free up an additional $80 million. Both pieces of legislation have met with resistance from lawmakers. Even if they pass, the Legislature will still need to find another $131 million, which Appropriations chair Rep. Ron Ryckman Jr., R-Olathe, called “the mystery money.”
Rep. Gail Finney, D-Wichita, who sits on the committee, doesn’t think the solution to the state’s revenue problem is that mysterious.
“I really believe we need to go back and reconsider some of our 2012 and 2013 tax cuts, because I think we’re just kind of fooling ourselves,” Finney said. “It’s time to get serious, and I’m just really puzzled as to why they’re not giving it top consideration.”
Scott told the committee that state coffers would have about $1 billion more if income tax cuts championed by Gov. Sam Brownback had not become law.
Rep. Don Hineman, R-Dighton, a member of the House Taxation Committee, took a different view of the shortfall, choosing not to include transfers from the highway fund, for example. He tweeted: “The true shortfall is structural imbalance: expenditures minus revenues. In FY16 that’s $807 million. For FY17, $789 million.”
The Brownback administration offered a budget amendment to the committee Thursday morning, but budget director Shawn Sullivan said it would not have a significant impact on the budget hole.
The amendment would lower spending from the state general fund by $37 million this year and by about $72 million for the next two years from the governor’s January proposal.
The bulk of the change this year comes from social service caseload adjustments. Lower than expected caseloads for foster care, Medicaid and other services yield about $36 million in state general fund savings this year, according to Legislative Research. Those changes are already reflected in the projections that show the state running a shortfall.
The amendment also includes other budget adjustments, such as an $18.7 million cut to the Healthcare Access Improvement Program in each of the next two fiscal years.
It reduces KanCare funding from the state general fund by about $24.4 million over the next two years, but offsets it with an equal amount of funding from a Medicaid drug rebate program that was expanded by the Affordable Care Act.
Asked if the amendment puts a significant dent in the $400 million target Sullivan set for lawmakers on Monday, he answered no. “It’s essentially still $400 million if you take out the governor’s tax proposal,” Sullivan said.
He said the administration did not plan to offer additional budget amendments at this time. That means lawmakers will have to figure out cuts or revenue increases when they return for a wrap-up session Wednesday.
A survey conducted by Fort Hays State University showed that 51 percent of respondents would like lawmakers to fix Kansas’ budget woes through a combination of spending cuts and tax increases, compared with 32 percent who wanted to fill the hole solely through spending cuts and 17 percent who wanted to rely only on tax increases.
The annual Kansas Speaks survey showed schools would be the least popular item to cut. Only 17 percent of respondents said public education should be cut, compared with 55 percent who would be OK with roads and highways being cut.
The poll showed that overwhelming majorities of Kansans would support raising taxes on large corporations and top income earners: 74 percent said large corporations should see their tax rates increase and 66 percent said top income earners should see their rates rise. Only 9 percent said rates for middle-class Kansans should increase and only 7 percent said rates should go up for small businesses.
However, somewhat surprisingly given those attitudes, more respondents said they would support increasing the sales tax – which more strongly affects the lower and middle class – than they would income tax: 66 percent of respondents would favor raising sales taxes, while only 26 percent would favor increasing income taxes.
The random sample survey of 519 Kansans was conducted between March 23 and April 1 and has a margin of error of 4.4 percentage points.