State finances a mess

Last spring’s record-long legislative session and historic tax hike have failed to put Kansas’ fiscal house in order. It’s time for Gov. Sam Brownback and GOP legislative leaders to clean up the mess, which was of their making.

Friday’s downward revision of revenue estimates for the current fiscal year confirmed what had been obvious after four months of lagging tax collections. The state isn’t taking in enough cash to cover its budget obligations, and could face a nearly $120 million hole for the year that ends next June 30.

State budget director Shawn Sullivan announced a variety of fund raids, transfers and “targeted reductions” to help the state escape this fiscal year with a mere $5.6 million ending balance. Not surprisingly, the highway fund will take another big hit – $50 million.

Even if the state ekes by this fiscal year, it faces more budget problems the following year. And the year after that.

It’s the long-term systemic fix that will really tax the state’s top leaders – and selectively add to the tax burden of Kansans.

First, Brownback must level with Kansans, and perhaps even himself, about what’s gone wrong and what must happen to make things right. Hard as rebalancing the state budget through fiscal 2017 will be, that won’t account for the state law mandating a 7.5 percent ending balance (which would take about another $475 million) or a likely Kansas Supreme Court order that millions more be spent on public schools.

As for rank-and-file lawmakers such as Rep. Pete DeGraaf, R-Mulvane, who sincerely believe that “Kansas still has a spending problem”: They’ve had plenty of opportunities to point to places to cut, and will have others as the crisis plays out.

Yet more and more key legislators are finding fault with the 2012-13 tax cuts, which went too deep and have done little to encourage hiring and economic growth. They also see clearly the fundamental unfairness in having zeroed out state income taxes for what turned out to be 330,000 Kansas business owners and farmers. Then they compounded the offense by raising the regressive statewide sales tax from 6.15 to 6.5 percent last summer. Though the governor and some lawmakers have started to talk up “consumption taxes” as if there are higher sales tax rates to come, sluggish collections since July suggest that source has its limits. And dreams are fading of Kansas joining the majority of states that either discount or exempt sales tax on food.

The lawmakers who sought to revisit the business-income exemption last spring were paralyzed by Brownback’s veto threat. He should withdraw it – or, better yet, lead Kansas back to fiscal health and a balanced tax system.

For the editorial board, Rhonda Holman

This story was originally published November 7, 2015 at 6:06 PM with the headline "State finances a mess."