Little change in new revenue estimate; Kelly urges caution

In perhaps the most steady revenue estimate in more than a decade, Kansas legislators will see little change in state finances when they return to write a budget on May 1.

For school finance, nothing has changed based on the new Consensus Revenue Estimate released Thursday.

Prior to the session break, legislators and Gov. Laura Kelly approved a $90 million K-12 increase for an inflation adjustment called for by the Kansas Supreme Court.

The measure is now before the court with plaintiff school districts saying it falls about $270 million short of what is needed for schools. A decision on the new school finance law is expected before June 30.

Kelly welcomed the revised estimates that added $14.9 million to the revenue projections for the current and next two fiscal years. The increase represents a minuscule change from the November revenue estimate in the state’s $7.2 billion annual budget. The projection would have been higher, but legislators made a $115 million KPERS payments earlier in the session.

“Kansas has been on a rollercoaster for the last eight years and we must allow adequate time to recover and rebuild,” Kelly said. “It’s encouraging that revenue remains stable as a result of steady, responsible tax policy, but we must remain cautious,” she said.

The Great Recession led to drastic revenue decreases in 2008 and 2009 and then tax cuts implemented by Gov. Sam Brownback in 2012 resulted in numerous budget cuts, credit downgrades and depleted reserves. In 2017, legislators repealed most of the cuts.

But during the current session, Republican legislative leaders have been pushing for tax cuts. Kelly vetoed one plan that would have mostly benefited corporations and has said she wants the budget to stabilize before considering cuts.

“We have just begun the rebuilding process,” Kelly said. “We still have significant challenges in most of our agencies that must be addressed, including serious safety concerns in our child welfare system and at state prisons. These critical issues must be addressed immediately.”

Kelly cautioned that a recent survey by the National Association for Business Economists has predicted the U.S. economy will slow in the coming year with a possible recession in 2020. The Federal Reserve also recently lowered its forecast on economic growth from 2.3 percent to 2.1 percent for 2019.

State fiscal experts also warned that the U.S. experiences a recession on average every five years and it has been nearly 10 years since the Great Recession.

While the Consensus Revenue Estimating Group projected slight increases in Kansas personal income and gross state product, they cautioned that state sales tax collections fell 0.5 percent from last year. The state’s 3.4 percent unemployment rate is the lowest since 2000 and the state has the highest number of job openings since 2004.

Share this post