When legislators return to Topeka Monday, the huge budget shortfalls that once plagued them won’t be there, but they will face an uncertain budget future and questions about how to fund a court-mandated increase in K-12 spending.
After several years of budget shortfalls following Gov. Sam Brownback’s signature tax cuts, legislators last year passed an income tax increase expected to bring in $1.2 billion over two years. It did not, however, return rates to their pre-cut levels.
Now, some legislators would like to see boosts to state services they deem underfunded, but the tax increase didn’t leave large ending balances. Even without a school funding increase, projections show a budget shortfall will emerge in 2020 if legislators plan to keep their pension payments on track and stop pulling highway funds into the general budget.
“We’ve been saying all along that recovery was going to be a long process,” said Heidi Holliday, executive director of the Kansas Center for Economic Growth.
Ending Brownback’s tax cuts was the “first step on that road to recovery,” Holliday said.
Holliday said it was clear Kansas needed more revenue, but many legislators have cast doubt on the prospect of another tax hike, and many face reelection this year. Senate President Susan Wagle, a Wichita Republican, said the idea “repulsed” Republican senators.
“This is one year where legislators really don’t want to come back and have to revisit everything again,” Wagle said. “Last year was a difficult year.”
Stronger-than-expected revenues make some lawmakers optimistic, but budget officials warn they won’t know the true impact of the tax hike until the April filing deadline. Kansas’ tax collections have outpaced predictions every month since the increase took effect.
Republican House Speaker Ron Ryckman, of Olathe, said legislators would be able to dig into agency budgets using more detailed priority-based budgeting, a tool implemented last year. He said legislators could offset expenses with agency cuts elsewhere to boost priorities, like early childhood education and mental health.
To help improve the budget situation, Ryckman suggested refinancing the state’s obligations to pay the Kansas Public Employees Retirement System and looking at tax exemptions.
This fall, a committee took issue with the lack of analysis Kansas performs on its tax incentives aimed at spurring economic development.
“We’ve talked to a lot of members, Republican and Democrat, and we’re finding very few with an appetite to raise taxes,” Ryckman said.
House Majority Leader Don Hineman said he wasn’t optimistic legislators would be able to find places in the budget they could easily cut to free up cash.
An interim committee weighing the state’s options for increasing school funding found an 18 percent cut to agencies would provide funds to increase school funding at the cost of closing prisons and severely limiting several agencies’ ability to function.
House Minority Leader Jim Ward, a Wichita Democrat running for governor, called that a “false choice” and suggested legislators come up with a school funding formula and then make the tax and budget changes necessary to fund it. He didn’t say what fixes might be worth considering.
Brownback’s office declined to comment on budget issues. Brownback will release his budget this week.