Archive for Wednesday, March 13, 2002

Kansas legislators ponder bleak economic projections

State deficit now at least $679 million

March 13, 2002

Topeka State legislators and the people they representare facing the prospect of deep state budget cuts plus tax increases after the bad news delivered Friday by the official state revenue estimating group.

The news was that the state's projected budget deficit has grown to at least $679 million from the $426 million estimated in November. Most of the $253 million difference is attributable to a drop in corporate and individual income tax revenues.

State budget officials said that although the national economy shows signs of recovering from its recent downturn, Kansas is lagging behind because its economy is so dependent on the aircraft and communication industries.

And more bad news is expected this week, when estimates are due on how much the cost of social services programs has risen. State Sen. Steve Morris, R-Hugoton, chairman of the Senate Ways and Means Committee, said last month the cost of these programs could be $40 million to $60 million more than was estimated last year, bringing the total budget shortfall to more than $700 million.

Gov. Bill Graves said Friday that the new estimates would require dramatic cuts in almost every area of state government, as well as increases in taxes and fees.

The previous $426 million estimate would have required cutting spending from the State General Fund by 5.1 percent, if taxes weren't increased.

Graves said he didn't think that even 5 percent cuts would pass. "I know we can't pass another $250 million of cuts," he said. "Some cuts we just can't do."

The new $253 million drop in expected revenue more than swallows up the $228 million tax increases Graves had proposed in January as a way to limits cuts in education and social services.

"All of a sudden $228 million looks a lot more necessary," Graves said. "There's going to be a revenue package."

Graves said he had no specific proposal yet to deal with the new numbers. "You have to be willing to look at every option," he said.

Expanded gaming was a possibility, Graves said. "I still think the gaming proposals are iffy. A lot of people have strong feelings against it.

"We need to roll up our sleeves and do some difficult work in a bipartisan way in both chambers," Graves said.

Senate President Dave Kerr, R-Hutchinson, said the new number was "a huge hole," about $90 million deeper than he had expected.

It was going to take both tax increases and large budget cuts to fill that hole, he said. But getting the Legislature to do that wasn't going to be easy.

Kerr said that last week there were still members talking about fixing the budget by measures like cutting travel for state employees, which was unrealistic. And members who still said no to any tax increases were wrong, he said.

Kerr has asked nine senators with a range of interests to form a bipartisan working group to come up with strategies for balancing the budget. They are: Senate Ways and Means Chairman Steve Morris, R-Hugoton; Senate Assessment and Taxation Chairman Dave Corbin, R-Towanda; Sen. Jim Barone, D-Frontenac; Sen. Pete Brungardt, R-Salina; Sen. Stan Clark, R-Oakley; Sen. Les Donovan, R-Wichita; Sen. Christine Downey, D-Inman; Sen. Paul Feleciano, D-Wichita; and Sen. Nick Jordan, R-Shawnee.

Clark said that they would have to consider all potential sources of revenue and all potential cuts, but that he wasn't ready to say tax increases were needed.

Last year the Legislature increased spending by about 6 percent. "We should have been better stewards of our resources last year," he said.

Clark said he was concerned that the Legislature would come up with a short-term budget fix that would hurt the state's long-term economic recovery.

Speaker of the House Kent Glasscock, R-Manhattan, called the new budget numbers staggering. He said he didn't think a budget based on cuts alone would pass. It would take both cuts and new revenue to solve the state's budget crisis. It wouldn't be an orderly process, he said.

Glasscock said that with 125 members, it was going to take time for the House to become educated about the seriousness of the problem.

"The House will be doing revenue and budgets till the cows come home," he said.

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