Yesterday, a group of state budget and tax experts and university economists released the official consensus revenue estimates for the current budget year ending June 30, 2014 (Fiscal Year 2014) and next year (FY 2015).
The new April estimates update projections made last November. The report says receipts to the state general fund will be $105.6 million more in the current year and $74.3 million more next year than projected in November, or an average of about 1.5 percent per year. However, that simply means that revenues will be 1.5 percent per year higher than previously expected – not that state revenues are actually growing at that rate.
Total state general fund revenues are now projected to be $5.96 billion this year, which is 6 percent less than last year ($6.34 billion). The loss is due to a 14 percent drop in state individual income tax revenue from the rate cuts approved by the Legislature and the Governor. Total SGF revenues next year are projected to be $5.99 billion, or 0.5 percent more than the current year. Individual income tax revenue is not projected to increase at all next year. Total taxes receipts – which exclude transfers and other adjustments to the state general fund – are expected to increase 1.3 percent from the current year to next year.
A much more detailed report from the consensus revenue estimating group will be released next week, and will include new projections for state economic activity. For now, the new estimates suggest the state economy is growing slowly: less than would be hoped after the significant tax cuts passed two years ago to stimulate the economic growth. However, revenue growth is also projected higher than expected five months ago.
That means the state general fund should be better able to absorb the cost of the school finance bill passed earlier this month and waiting for Governor Brownback’s signature (or veto). The school funding bill adds about $130 million for school district state aid next year beyond increased funding already approved by the Legislature and proposed by the Governor. The new revenue estimates were increased by $178 million over two years. The Legislature has not passed appropriations bills for state programs other than K-12 and higher education.
The new estimates only consider the current fiscal year and next year (FY 2015). Previously projections indicated the state would likely face a budget deficit in future years if state revenues do not increase at more than normal historical rates, because of future income tax rate reductions already locked in place and projected increases in mandatory spending such as health care caseloads and pension costs.
The Senate Ways and Means Committee will meet Tuesday, April 22 at 10:00 a.m. to review the consensus revenue estimates and other budget issues. The House Appropriations Committee is scheduled to meet Wednesday, April 30, to review the consensus revenue estimates and take action on appropriations bills for bill state agencies.