Kansas will miss revenue expectations for June by more than $33 million, according to two sources in state government.
That comes on top of the $45 million shortfall the state already faced for the 2016 fiscal year, which ends June 30, and after the state lowered revenue estimates significantly in April.
Budget director Shawn Sullivan told the State Finance Council last week that fund sweeps and a possible delay of state payments to school districts probably would be necessary to keep the state above zero for the end of the fiscal year, as required by Kansas law.
The bulk of the June shortfall can be attributed to lower-than-expected income tax receipts, sources said. Corporate income tax receipts are expected to be $20 million below expectations, and individual income tax receipts are expected to be $18 million off the mark. Some other types of taxes outperformed estimates, but not enough to fully offset the loss.
The Kansas Department of Revenue would not confirm the figures Thursday afternoon and said official numbers are set to be released Friday.
The governor’s office noted that Sullivan had already warned that the state’s shortfall was likely to grow. It said it would announce a series of moves, meant to balance the budget, on Friday.
Sullivan floated taking $16 million from the state’s highway fund, the last available dollars in the fund to sweep, and tapping a $45 million Medicaid fee fund to help fill the budget hole. He also said the state could delay a portion of the June payments for school districts until July. Sullivan emphasized that schools would still receive the full payment.
Sen. Laura Kelly, D-Topeka, the ranking Democrat on the Senate budget committee, said she worries that payment delays will become a more frequent occurrence.
“We have cut so much now that I don’t think we can cut any more. … What I fear will happen is that we will just not pay our bills, drag things out like that, we’ll do more delayed payments,” Kelly said.
The governor’s office said the revenue shortfall would not affect the $38 million school finance bill lawmakers passed last week to avoid a school shutdown.