New Kansas revenue projections on horizon

TOPEKA, Kan. (AP) — Legislative leaders offered differing views Thursday of what upcoming state revenue projections for the fiscal year that starts July 1 may look like, but agreed that the state faces challenges.

A group of Kansas officials and economists will gather next week to study revenue forecasts for the coming year, determining if the state economy is growing and if tax receipts will keep government afloat.

“I think the general economy is trending upward. I think the general Kansas economy is trending upward,” said Senate Vice President Jeff King, an Independence Republican. “There are still challenges in this economy. Everything is not rosy.”

Tax collections through March were $130 million above the forecasters’ November 2013 estimate. Next week’s projections are expected to be revised upward to reflect the growth, which will help legislators finish the fiscal 2015 budget when they return later in April.

Revenue Secretary Nick Jordan said gains in individual and corporate income taxes, as well as sales and use taxes, suggest the economy was growing and creating more jobs.

Kansas collects close to $6 billion in taxes on income, sales, tobacco, alcohol and mineral production.

Current state budget projections show Kansas with positive ending balances at the end of the next fiscal year ending June 30, 2015. Future budget years could prove more difficult to balance absent increases in revenue or substantial cuts in government spending.

King said Kansas had seen good job growth, though noted that 200 jobs were lost in Coffeyville recently when a wire plant announced it would close. The unemployment rate was 4.9 percent in March.

Revenues were hurt when the state enacted income tax cuts in 2012, followed by a reduction in the sales tax rate in 2013. The state had $705 million in reserves on June 30, 2013, and is projected to have $567 million at the end of the current budget year.

While current budget projections include the $129 million in spending to address the school funding equity issues raised by the Kansas Supreme Court in its March 7 ruling, none of them reflect any increased spending that may be required if overall school spending is deemed inadequate.

A three-judge district court panel will review overall education spending and determine if funding should be adjusted. No timetable has been given for a decision.

House Minority Leader Paul Davis, who is seeking the Democratic nomination for governor, has been critical of Republican Gov. Sam Brownback’s tax cuts. Davis pointed to a recent report from the governor’s Council of Economic Advisers that showed Kansas lagging behind its neighbors in personal income, employment and gross domestic state product.

“No matter what the revenue projections are this week, Kansans really need to focus on the drop in revenue since the Brownback tax plan took effect,” said Davis, of Lawrence. “Our economy is stagnant.”

Davis opposed the tax cuts enacted in 2012 but has not said if he would push to repeal them if elected governor in November.

King said it may be three to four years for the impact of the tax cuts to be known.

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