Gov. Sam Brownback said Monday that he did not know before the election that the state would hit a budget shortfall this fiscal year and that he is “looking at everything” to fill the projected budget hole.
The state faces projected shortfalls of $279 million for this fiscal year, which ends in June, and of $436 million on top of that for the next fiscal year. That means the predicted budget hole for next year is $715 million based on current spending levels.
Brownback, who spoke briefly to reporters while leaving a meeting of the State Finance Council, would not say whether he would make allotments, or spending cuts that do not require the Legislature’s approval. He said the state would review all of its options.
“We’re looking at all factors – everything – spending a lot of time thinking about it, talking with the agencies and others. We’re looking at it all very thoroughly,” Brownback said.
Asked if the state needed to tweak its income tax policies and possibly delay income tax cuts scheduled for the future, he said, “We’re looking at all of it.”
Brownback championed and signed a bill that eliminated income taxes for some business owners, reduced rates across the board and set up additional tax cuts in the future. The tax cuts are considered the primary cause of the shortfall by the state’s nonpartisan Legislative Research Department.
Senate President Susan Wagle, R-Wichita, and other Senate leaders have promised to look at taxes and spending in their quest to balance the budget. House Speaker Ray Merrick, R-Stilwell, on the other hand, has called for the fix to happen primarily through spending cuts.
Brownback did not give a specific timeline for when he would unveil a plan to plug the budget hole.
“We’re trying to make decisions as wisely, as prudently and as quickly as possible,” he said. “We’re looking at everything.”
Asked when he was first briefed that the state would have a shortfall this fiscal year, Brownback said it was not until the consensus revenue estimating group met Nov. 10, six days after he won re-election.
“I knew what the public knew,” Brownback said.
On the campaign trail, Brownback repeatedly dismissed concerns about the state’s finances raised by his opponents and economists.
“They’re just trying to paint a ‘Chicken Little sky is falling’ situation, which is not true. It’s a bunch of lies,” he said in October.
The State Finance Council meeting was the first time that Brownback had met with his Democratic opponent, outgoing House Minority Leader Paul Davis, since the election. Brownback thanked Davis for his service to the state.
The council, which handles financial matters when the Legislature is out of session, did not delve heavily into budget issues at the meeting, which focused on the sale of state properties and the refinancing of bonds. Davis did not raise the issue.
He did speak about it afterward.
“I don’t know why this is a surprise to him or anyone else. We have been looking at the numbers and what this tax plan does to state budget over time and clearly it has a pretty devastating effect on state revenues,” Davis said.
“I think now is the time when you have to demonstrate some leadership. And if I were to give him political advice – which I’m sure he’s probably not interesting in taking – I would tell him that I think you just need to own up to the problem he’s created and you need to find a solution to it,” Davis said.
He centered his unsuccessful campaign to unseat Brownback on the state’s finances, warning that cuts to education and transportation were on the horizon.
Davis said he did not think the state could fix its budget problem without revisiting tax policy.
Senate Minority Leader Anthony Hensley, D-Topeka, who also sits on the State Finance Council, questioned Brownback’s claim that he was not informed of the looming shortfall until November.
“That begs the question then that why wasn’t he talking to his budget director. Because his budget director claims he’s been working on a plan since June. That’s what he told the news media at that news conference,” Hensley said.
“I don’t believe him when he says that. They would have had to have known. (The Department of) Revenue was given the red flag over the past year basically. And Paul and I have been talking about this for the past two years,” Hensley said.
When Shawn Sullivan, the state’s budget director, announced the shortfall on Nov. 10, he said that his office had been looking for cost savings since June. Sullivan didn’t explicitly state his office knew the state would hit a shortfall this fiscal year, but some Democrats inferred that from the search for savings.
Although the shortfall did not explicitly come up at the finance meeting, Wagle did note in her opposition to a proposal to advance a state bond issue for the National Bio and Agro-Defense Facility in Manhattan that “we have a lot of legislators concerned about finances right now.”
Wagle and other lawmakers want to make sure the state secures an agreement with the federal government that Kansas will not incur extra costs if the project runs over budget before they authorize more than $230 million in revenue bonds.
Concerns voiced by Wagle and others kept that proposal from moving forward. The council will revisit it at a future meeting.
Concerns about the budget also were raised briefly at a meeting of the Legislative Coordinating Council immediately after the finance council meeting.
Wagle asked Raney Gilliland, the director of Legislative Research Department, if his department could withstand an allotment, or cut.
Research already recommended its budget for this fiscal year be reduced by $300,000 on its own. Gilliland said it could still survive an additional allotment if that came to pass.