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AP: Kansas officials see scant change in revenue outlook

4/20/2013

TOPEKA (AP) — A new fiscal forecast Friday brought little change to Kansas' revenue expectations, but state officials lowered their projections for social services costs and created what Gov. Sam Brownback's administration called a "dividend" to use elsewhere in the budget.

TOPEKA (AP) — A new fiscal forecast Friday brought little change to Kansas' revenue expectations, but state officials lowered their projections for social services costs and created what Gov. Sam Brownback's administration called a "dividend" to use elsewhere in the budget.

The new projections from university economists, legislative researchers, Brownback's budget staff and officials from several departments represented good news overall, with the decline in anticipated costs from programs for the needy and disabled, most notably Medicaid. But forecasters also warned that they expect the U.S. economy to remain stagnant in the short term, prompting them to make only slight changes in their projections for overall revenues.

Brownback and legislators will use the new numbers in budgeting. The forecasters made projections for the current fiscal year and the fiscal year that begins in July, revising numbers issued in November.

State officials now expect social services programs to cost the state about $62 million less than previously expected during the current and next fiscal years, remaining around $1 billion each of those years. In addition, the state won't have to spend as much in funds from the federal government on those programs.

Legislative researchers and the governor's budget staff attributed part of the decline in anticipated costs to the state's overhaul of its Medicaid program. Kansas turned administration of almost the entire program — renamed KanCare — over to three health insurance companies, promising both lower costs and improved coverage.

"We now have a KanCare dividend," said Lt. Gov. Jeff Colyer, a surgeon and former state senator who led the administration team that developed the plan for overhauling Medicaid.

Colyer said the projected savings could be used to reduce the number of disabled Kansans waiting for services that help them keep living at home or to assist with financing the expansion of the University of Kansas Medical Center in Kansas City.

Legislators are taking their annual spring break and are scheduled to reconvene May 8 to wrap up their business for the year.

Brownback wants to follow up massive individual income tax cuts enacted last year with another round of reductions in personal income tax rates over the next four years. To stabilize the budget, he's proposed keeping the state sales tax at its current 6.3 percent rate, rather than letting it drop to 5.7 percent in July, as scheduled by law.

The governor told reporters Friday that keeping the current sales tax in place remains important to providing adequate funds for public schools, higher education and other budget items. Colyer said that with the anticipated savings in social services costs, Kansas can balance such needs with additional income tax cuts — if the sales tax remains where it is.

The Republican-controlled Senate has endorsed the GOP governor's sales tax proposal, but the Republican-led House has rejected it. House GOP leaders have proposed less aggressive income tax cuts.

The latest fiscal forecast still anticipates that lawmakers let the sales tax drop.

The new forecast predicts the state will collect $6.2 billion in revenues during the current fiscal year and $5.5 billion for the fiscal year beginning in July. The new figures are a combined $20 million higher for the two fiscal years than the previous projections.

But revenues are now expected to drop $745 million, or 12 percent, during the next fiscal year following the income tax cuts.

House Minority Leader Paul Davis, a Lawrence Democrat, said the new projections continue to show that last year's tax cuts created a severe budget crisis.

Meanwhile, Republican House Speaker Ray Merrick from Stilwell released a statement saying, "While there were not significant changes in the estimates, they are extremely helpful in assessing the economic picture as we finalize the state budget."

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