Revenue shortfalls could mean tax hikes and spending cuts for Kansas

Capitol Bureau

TOPEKA, Kan. (KSNT) — Kansas is dealing with a financial bombshell in the midst of the coronavirus pandemic. Economic and legislative experts are projecting that the state will lose more than one billion dollars in the coming years.

The lack of revenue coming in to the state combined with the cost of fighting the coronavirus has Kansas, and many other states, expecting a major economic downturn. Experts are comparing it to the United States recession in 2009 and the Kansas recession following former Governor Sam Brownback’s tax cuts in 2015.

“This makes that look… this is challenging and we’re in uncertain times, and so there’s going to be changes,” said Larry Campbell, Kansas Budget Director.

It is being projected that Kansas will have a $653 million shortfall by the 2021 fiscal year. According to the Director of the Kansas Department of Legislative Research, J.G. Scott, the Kansas constitution requires the state budget to at least be at $0, meaning it cannot be in the negative.

“That’s why people keep looking at [fiscal year] ’21 and saying, ‘this is big’, because we’re going to have to make adjustments,” explained Scott.

To make up those lost funds, political analyst Bob Beatty says Kansas could see tax increases, major budget cuts or both.

“Either you raise taxes or you cut spending and really most people would rather cut spending, to be honest, because people hate to see their taxes go up,” said Beatty.

At her daily press conference on Tuesday, Governor Kelly said she has not decided how the state will make up for the lost revenue. Though she has already directed state agencies to hold off on hiring and unnecessary spending for the time being. The Governor said she will speak with Budget Director Campbell and legislators this week to come up with a plan.

Despite the major losses projected for Kansas, Beatty says that Kansas is actually in a much better place than some other states.

“Already some other states are having to cut right now because they have no extra money,” said Beatty. “Kansas had some money in the bank; so it’s going to be painful, but maybe not as painful as some neighboring states.”

Both Beatty and Scott say they are hopeful that the Federal Government will provide additional funding to help bailout states.

“There’s been a lot of discussion of helping states with some of their revenue shortfalls that are being caused by this,” explained Scott.

This would be similar to what happened following the 2009 nationwide recession.

“If Washington D.C. passes something, it could mean hundreds of millions of dollars to the state of Kansas, which could help get the state through this next year and a half,” said Beatty.

This funding assistance would be in addition to funding that came from the Federal Government to help state’s fight the coronavirus, which was only allowed to be used for coronavirus assistance and not for boosting state budgets.

Scott added that, barring any other roadblocks, he anticipates the state will be able to work through the shortfalls within the next couple of years.

“We won’t be to where we were before and that’s still going to be a big decrease in the next years’ revenue,” said Scott. “But then I would anticipate it to continue to grow from there.”

Both the Senate Ways and Means committee and the House Appropriations committee will meet later this week via video call to go over the budget shortfalls and what that could mean for the state.

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