$53 Million in the Hole, Kansas Cuts Higher Education

by | March 2, 2016

By Edward M. Eveld

Kansas tax receipts fell $53 million short of estimates in February, and Gov. Sam Brownback on Tuesday immediately announced a $17 million cut to the state's university system.

The latest revenue results are a dramatic blow to recent moves by the Legislature to shore up the state budget.

Individual income tax revenue last month was about $27 million below projections, and sales tax receipts missed estimates by about $12 million, according to the state's Department of Revenue. Corporate income taxes were $7.7 million below estimates.

Brownback said the state's budget problems reflect economic woes, not tax policy problems. He said he would focus on managing spending, not on raising taxes.

Brownback said he notified the Kansas Board of Regents of a 3 percent cut in the allocation of state tax dollars to the higher education system.

"Our tax policy has been instrumental in creating more than 80,000 jobs since we took office and has resulted in a record number of Kansans working," Brownback said in a written statement. "These numbers reflect a declining national and regional economy."

"There are difficult decisions to be made, and we will be working with the Legislature over the next few weeks to address these spending issues," he said.

Board of Regents chairman Shane Bangerter said the board would make a decision by the end of the week about how to allocate the 3 percent cut across the six state universities.

Revenue Secretary Nick Jordan cited the downturns in the oil and agriculture economies for holding down tax receipts. Iowa, Oklahoma and Nebraska are among the states experiencing similar problems, he said.

Income tax withholding had seen growth through January, Jordan said, and with low unemployment and wage growth, the lower February number didn't make sense.

"We're hoping it's a one-month blip and we'll be back on track in March," Jordan said.

The Legislature passed a bill in February to repair a $200 million budget shortfall, but it left projected reserves of just $6 million for the 2016 budget year ending June 30. The state's annual budget is about $16 billion.

The latest bad news on the revenue front -- tax collections have fallen short of monthly projections for much of the past two years -- brought swift condemnation of Brownback's policies.

"For months, Democrats have called on Governor Brownback and his Republican allies in the Kansas Legislature to end the economic experiment," House Minority Leader Tom Burroughs, a Kansas City, Kan., Democrat, said in a written statement. "The revenue numbers released today reveal the true damage of their fiscal mismanagement."

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said that "if Sam Brownback's handling of our state's budget were brought before a court of law, he would be found guilty of gross negligence."

Balancing the state budget has been a challenge since Brownback and the Legislature cut income taxes in 2012 and 2013, and even after raising sales and cigarette taxes in 2015 to boost revenues.

Brownback has the authority to make specific cuts to keep the budget in balance. Also, the Legislature gave Brownback the power to delay payments to the state's pension system before the end of the current fiscal year in June, but the money must be paid back in the fall with 8 percent interest.

Senate President Susan Wagle, a Wichita Republican, said the public was not in a mood for tax increases.

"The time has come to cut every government-funded entity," Wagle said. "The reduction will be small when equitably spread across the board."

Adding to the Legislature's money woes is a recent state Supreme Court ruling demanding that the Legislature restore "equitable" funding among school districts by June 30 or risk a shutdown of public schools for the 2016-17 school year. The remedy could require an additional $100 million in school funding.

(c)2016 The Kansas City Star (Kansas City, Mo.)