New Kansas fiscal forecast a little better, helps budget fix
By JOHN HANNA
Apr. 20, 2017
TOPEKA, Kan. (AP) — Kansas saw its budget picture improve slightly Thursday after officials and university economists issued a new fiscal forecast that was a little more optimistic about the state's economy and tax collections than the previous one.
The state's forecasting group increased projections for tax collections by a total of $156 million through June 2019. The revised predictions in turn shrunk the state's total budget shortfalls for the period to $889 million from about $1 billion.
The new forecast is the first positive one in three years and a little good news for Republican Gov. Sam Brownback and the GOP-controlled Legislature, which returns from its annual spring break May 1. Many lawmakers have been pushing to roll back past personal income tax cuts championed by Brownback and the new forecast allows for smaller tax increases.
"Things are slightly better on some fronts," said Shawn Sullivan, the governor's budget director.
Brownback and legislators had been using a pessimistic forecast issued in November that assumed economic slumps in agriculture and energy production would continue through next year. The forecast also assumed that unemployment would rise through 2019 and that Kansans' income growth remains below normal.
The economic news has been less dire since November. While unemployment rose slightly after May 2016, it began dropping again in January and was only 4 percent in February. Total private-sector employment has been slightly higher in year-to-year comparisons, and Kansans' total personal grew 2.8 percent in 2016, a little better than in 2015.
Also, the state's tax collections since November have been $57 million more than anticipated, leaving the state with a surplus of 1.4 percent for its current fiscal year.
But the forecasters still are worried about agriculture and now have concerns about manufacturing employment dipping in the Wichita area and wages declining slightly statewide.
"There are some storm clouds on the horizon," said Raney Gilliland, the director of the Legislature's research staff.
Kansas has faced persistent budget problems following massive personal income tax cuts in 2012 and 2013 championed by Brownback and problems in agriculture and energy production. Voters last year turned on him and his conservative allies, electing more Democrats and GOP moderates.
And Senate Minority Leader Anthony Hensley, a Topeka Democrat, said that even with higher projections for tax revenues, Kansas continues to face a "self-inflicted budget crisis."
"This estimate adjustment doesn't change anything," Hensley said. "The Legislature has a monumental task ahead of us."
The new fiscal forecast projects that Kansas will collect $5.7 billion in taxes in the current fiscal year ending in June, up $63 million over the previous forecast, or 1.1 percent. The new forecast takes into account the extra tax dollars collected in recent months.
The new projection for fiscal 2018, beginning in July, is $5.8 billion, an increase of $43 million, or 0.7 percent over the previous forecast. The new forecast for fiscal 2019 is $5.9 billion, up $51 million, or 0.9 percent.
If the state hits the estimates, its overall tax collections will grow modestly in fiscal 2018 and again in fiscal 2019.
The forecasting group is legislative researchers, university economists, state Department of Revenue officials and members of Brownback's budget staff.
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