Kansas faces deficit in current budget

TOPEKA, Kan. - A new financial forecast Tuesday indicates that state government will have a $137 million budget deficit next June, an outlook that is likely to force a round of belt-tightening by state agencies to prevent it.

The forecast also said that if Kansas' budget problems aren't addressed, the shortfall between anticipated revenues and existing spending commitments could grow to nearly $1 billion by June 2010.

The new forecast from state officials and university economists is far more pessimistic than the one Gov. Kathleen Sebelius and legislators used in drafting the current budget earlier this year. They could be forced to rethink the promises they have made in recent years on spending for public schools, higher education and social services.

"Summarize it in a single word — bad," said Alan Conroy, director of the Legislative Research Department, one of the forecasters. "It'd be a capital 'B.'"

The forecasters slashed $211 million, or 3.5 percent, from the previous estimate for the state's general revenues during the current fiscal year, which began July 1. The old estimate was $6.02 billion, and the new one is less than $5.78 billion.

They also said revenues would remain flat at $5.78 billion for fiscal year 2010, which begins next July. Previously, legislative researchers had assumed in their budget projections that major tax sources would grow by 4 percent.

And even under the old, optimistic scenario, legislative researchers had told lawmakers that they would face a $228 million shortfall in fiscal 2010. After the forecast Tuesday, the figure ballooned to nearly $959 million.

"There's no getting around the belt tightening," said Senate President Steve Morris, a Hugoton Republican.

Morris still held out hope that lawmakers could get by with "minimal cuts" for the current fiscal year. Sebelius already had ordered state agencies to prepare to cut 2 percent from their current budgets and draft plans for trimming an additional 5 percent in fiscal 2010.

"But next year it will take a lot of doing," Morris said.

About half of the state's general revenues come from individual income taxes, and another third come from retail sales taxes. Projections from both for the current fiscal year were revised downward in the new forecast.

Before the forecasters met, Sebelius said Kansas is doing better economically than other states but will start to see its income tax revenues slip as people's losses in the financial markets translate into lower capital gains.

Also, she said, "As consumers get nervous, they spend less money buying things, so sales tax goes down."

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