Kansas Budget Hole Shrinking as Economy Picks Up

Kansas is seeing its projected budget shortfall shrink because of better-than-expected revenue collections last month, according to a new estimate released Thursday.
The projection of $267 million represents the gap between anticipated revenues and current spending commitments for the fiscal year that begins July 1. The state expects to have a little less than $6 billion in revenues to finance education, social services and other government programs during that year.
The end-of-November projection for the shortfall had been $295 million, but the state saw a $31 million bulge in revenues in December, particularly in individual income tax collections.
Researchers said it’s not clear whether the unanticipated collections signal continuing economic growth. The incoming Senate majority leader, Terry Bruce, a Hutchinson Republican, suggested the bulge could have resulted from end-of-year tax planning.
“Every little bit helps, but we probably need to treat that bulge as one-time money,” Bruce said. “I’m going to proceed cautiously.”
Legislators must erase any projected shortfall during their annual session, which opens Monday.
The gap results from massive income tax cuts approved last year to stimulate the economy. The state reduced individual income tax rates and eliminated income taxes for the owners of 191,000 businesses.
Gov. Sam Brownback and other supporters of the tax cuts have acknowledged that a boost in economic activity would lag, possibly causing budget issues.
But critics contend — whatever the month-to-month projections — that the income tax cuts will lead to a permanent financial crisis.
“It’s very irresponsible and reckless,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat.

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