Kansas Announces Big Budget Gap; True Gap May Be Even Larger
State officials said this week that the tax cuts championed by Gov. Sam Brownback would force them to start a new round of substantial budget cuts before the end of June.
They need to cut $279 million, $239 million of which is attributable to lower-than-expected personal income tax collections. Those aren’t small numbers in a state budget of approximately $6 billion and where revenues have already declined sharply. Kansas state revenues dropped 11 percent in the fiscal year 2014 (which ended in June) after the tax cuts took effect.
But that may not even be the whole picture. A close look at the state’s new revenue projections makes clear they are highly optimistic, even after this week’s cut in the forecast. Kansas says it expects to collect slightly more personal income tax this year than it did last year, even though, with four months of collections in, they are 11 percent behind last year’s pace.
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There may be even bigger challenges coming. In addition to the likelihood the state will face another unpleasant revenue surprise in the spring, a pending court decision could obligate the legislature to add hundreds of millions of dollars a year to state aid to school districts. And bond rating agencies, which already downgraded the state’s debt this year, could be expected to react negatively to both of those events.
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