(Syndicated to Kansas newspapers June 2, 2014)
OK, we got the news, Kansas revenues are down about $300 million from estimates in the past two months, and that’s not good for the budget that has just been passed and for the upcoming fiscal year which starts July 1.
And, we have an election-year summer ahead of finger-pointing and casting blame for the massive reduction in state revenues.
Democrats point at Gov. Sam Brownback for his tax cut program. Republicans point at President Barack Obama, who scared the wealthy back in 2012 when he proposed allowing those tasty President George Bush-era tax cuts to expire—but they didn’t.
Oh, you can further dissect the revenue drops: The then-moderate Republican Kansas Senate in 2012 loaded up the governor’s tax cut proposal with more cuts and less revenue-enhancers than he had proposed, sending him a bill with outrageous revenue implications—but he signed it anyway.
Or, you can take the tack that the entire national economy was shaken, not stirred, by the possibility of federal income tax changes in 2013 (which didn’t happen), and it took a year for canny federal taxpayers to square up their investment decisions. Oh, and then there’s always Obamacare and federal spending and the national deficit and whatever you want.
But the key for us folks who spend too much time in the Statehouse is that there is going to be a lot less money floating around the state treasury than anyone feels comfortable with.
Estimates—and it’s just estimates now—are that the Legislature and the governor are going to see for the fiscal year that starts July 1 and for which appropriations have already been approved at least $300 million less in the bank.
It’s enough of a reduction in receipts that you can count on whoever is governor next year and the Legislature to spend much of the session cutting budgets that agencies have already been handed.
It is starting to look like that Republican-estimated ending balance for the upcoming fiscal year—$288 million—isn’t going to happen. And it’s starting to look like a Democratic projection of ending balances is going to be closer to right—at maybe $70 million.
And then, whoever is governor is likely to have to make budget allocations—essentially cuts in spending already promised—single-handedly. Former Gov. Mark Parkinson had to do that several years ago during the national recession just to keep the government running…and he came under heavy criticism from nearly everyone.
So? The politics of this revenue drop are going to be bitter this election cycle. A canny candidate for reelection will hold off on those cuts until after the election and a smart challenger will wail that the governor is delaying those allotments for purely political reasons. Both, of course, are right.
Makes the upcoming election campaign more interesting. Nobody’s talking about the obvious fix: Raising taxes… And nobody’s talking about the other option: Cutting spending…