March 1, 2016
Kansas tax revenue has come up short once again.
The Department of Revenue announced Tuesday that total state revenues for February were $56.7 million under projections lowered just four months ago to adjust for worrisome economic trends.
Individual income tax receipts were $27 million short of projections. Sales tax revenue was $12.3 million short.
Revenue Secretary Nick Jordan said a downturn in the oil and gas industry was dragging down the economies of several Midwestern states including Kansas.
Democratic legislative leaders said the income tax cuts Gov. Sam Brownback pushed through the Republican-controlled Legislature in 2012 remain at the root of the state’s revenue and budget problems.
As he has in response to previous shortfalls, Brownback insisted his tax cuts were not to blame.
“This is an economic problem, not a tax policy problem,” he said in a statement issued minutes after the revenue numbers were announced. “These numbers reflect a declining national and regional economy.”
Brownback said he will oppose any effort to adjust the tax cuts despite calls from some influential Republicans to restore taxes on the pass-through incomes of more than 300,000 business owners.
The governor said he would instead focus on “managing spending.”
To that end, he ordered an immediate 3 percent cut in the budgets of the state’s Board of Regents universities, requiring them to reduce their approved budgets by $17 million with only four months remaining in the fiscal year.
In an opinion piece published recently by several Kansas newspapers and broadcast Tuesday on Kansas Public Radio, former Kansas Budget Director Duane Goossen said even though Brownback sold the tax cuts as a way to stimulate the state economy, his real goal may have been “squeezing down” state government.
“If you truly bought into the argument that giant tax cuts would lead to prosperity without hurting schools and highways, you’ve been had,” Goossen wrote. “Meanwhile, those wanting Kansas to spend less regardless of the consequences have met success.”
Goossen, a former Republican legislator, served as budget director for 12 years under governors of both political parties, starting with Republican Gov. Bill Graves.
The lower-than-expected revenue numbers will present an immediate challenge to lawmakers returning Wednesday to the Statehouse after a brief mid-session break. Prior to the break lawmakers approved a series of spending reductions and one-time fund transfers to erase a projected $200 million shortfall in the fiscal year 2017 budget, which takes effect July 1.
But those measures won’t be enough to cover the February revenue shortfalls or any that may occur in subsequent months this fiscal year. The preliminary budget plan also doesn’t include any of the additional money that likely will be needed to satisfy the recent decision by the Kansas Supreme Court declaring the state’s existing school funding formula unconstitutional.
Read more from the Kansas Health Institute here.