By Mike Shields, KHI News Service,
April 16, 2010
TOPEKA — The budget hole facing legislators when they return to Topeka later this month will be larger than some expected, which means they will have to find ways to find about $510 million in spending cuts, taxes or some combination in order to meet the state's constitutional requirement for a balanced budget.
Revenue estimators today released their revised projections for what the state will collect in taxes and fees for the remainder of the current fiscal year and the coming one, which begins July 1. The $400 million to $450 million shortfall some anticipated has officially grown.
"It certainly makes the budget hole larger, but not catastrophically so," said Duane Goossen, state budget director.
The most immediate problem for lawmakers will be the $70 million shortfall projected for the current fiscal year, which ends June 30. That leaves little time and limited options for remedies.
"You cannot impose a tax fast enough to generate that kind of money," said Alan Conroy, director of the Legislature's research department. "The options narrow as we get closer to the end of the fiscal year."
Lawmakers have three choices, he said:
Gov. Mark Parkinson, a Democrat, began the session proposing $380 million in tax increases. But it wasn't immediately clear if he will now push for a bigger tax package.
"The governor's just getting these numbers today," Goossen said.
About $123 million in budget relief could come if Congress agrees to extend enhanced federal Medicaid assistance approved as part of the 2009 economic stimulus package. The extension has already cleared the U.S. Senate but remains a work in progress in the U.S. House.
The governor's tax plan and others discussed so far by the Legislature have focused on various types of sales tax increases, ranging from boosting the general levy to more targeted increases on the sales of tobacco, alcohol or soda pop. There also has been talk of closing sales tax exemptions.
Senate Minority Leader Anthony Hensley, D-Topeka, said his caucus will push for a tax package of about $480 million, probably including an income tax increase.
"A married couple making $50,000 a year is taxed at the same rate as a couple making $6 million or $60 million a year," Hensley said. "We used to have nine brackets. I just think we ought to have that debate."
Rep. Kevin Yoder, R-Overland Park, is chairman of the House Appropriations Committee, and like other members of the House GOP leadership team has taken a tough stance against new taxes.
He said the new numbers hadn't changed his mind about taxes and .
"What we're opposed to is raising the burden on businesses and individuals," he said. "I think it slows the economy."
Conroy said the economists saw a "few flickers of hope" in the state's economic recovery but that so far it remains "anemic."
Particularly troubling, he said, was the 6.7 percent unemployment rate, which the forecasters don't see improving quickly.
"Until jobs come back and we see recovery in that area," he said, "it's safe to assume there's not going to be a comeback in individual income tax collections," which are the state's single largest source of revenue.