Politics & Government

After years of budget turmoil, Kansas revenue is ‘stable.’ But officials urge caution

Kansas’s financial situation is not expected to change dramatically over the next two years, meaning fights among lawmakers over taxes and spending are likely to continue.

State officials released a twice-yearly revenue forecast Thursday that projects only a modest increase in revenue over the next two years. The new figures will do little to resolve disputes between Republicans and Democrats when they return to Topeka on May 1.

Kansas is expected to bring in only $15 million more than previously anticipated between now and July 2021, economists and budget officials said.

“Now we have cautious optimism and that what you’re seeing here is a stabilizing of our numbers and our revenues, but I would say one year is not a trend,” state budget director Larry Campbell said.

Tax collections are expected to grow at a faster clip, but officials indicated much of the additional tax revenue will be swallowed up by revenue declines elsewhere.

From now until July 2021, Kansas is expected to collect $162 million more in total taxes that previously expected. But other revenues are predicted to drop by $147 million over that same time. Officials cited a one-time $115 million payment to the state’s pension system that lawmakers approved earlier this year as a major source of the decrease.

In the wake of the new projections, Republicans and Democrats are both likely to continue arguing that the Kansas budget can support their favored policies.

For Republicans, that’s legislation to limit the growth of tax payments for individuals and businesses. Democrats want to expand eligibility for Medicaid, which provides health coverage for low-income individuals and people with disabilities.

“Kansas has been on a rollercoaster for the last eight years and we must allow adequate time to recover and rebuild,” Gov. Laura Kelly said in a statement. “It’s encouraging that revenue remains stable as a result of steady, responsible tax policy, but we must remain cautious.”

Earlier this month, lawmakers passed and Kelly signed a $90 million school funding increase. Republican critics predicted the plan would ultimately prove unsustainable, but Kelly and other say the state can afford it.

Republicans may renew calls for tax legislation that could prevent Kansas from collecting hundreds of millions over the next few years. Lawmakers passed tax legislation earlier this year that would have cost the state about $500 million over three years, but Kelly vetoed it.

Some Republicans, such as Senate President Susan Wagle, want to try again to pass a tax bill. Wagle said this week she wants to “work on another tax bill and fly (Kelly) another tax bill” when lawmakers return to Topeka.

Kansas tax revenues have been on an upward swing since the Legislature largely repealed then-Gov. Sam Brownback’s signature income tax cuts in 2017. Since then, lawmakers have approved hundreds of millions in additional spending for schools and are close to approving a budget that will boost funding to state agencies after years of budget turmoil.

Lawmakers are currently negotiating a final budget package. Thursday’s projections show the House’s budget would leave Kansas with about $700 million in the bank at the end of the coming fiscal year. The Senate budget would leave about $523 million.