Kansas Revenues Off Nearly $100 Million | Complicates Budget

TOPEKA, Kan. (AP) -- Kansas House and Senate budget negotiators have begun working on a spending agreement, casting aside a bleak revenue report that could undermine a rosier economic forecast leaders are using to justify higher spending.

The talks began Wednesday evening, a few hours after the state Revenue Department reported that April's tax collections totaled $92 million less than expected. Officials blamed changes in the federal tax code on capital gains and other income.

“What we are seeing today is the effect of tax increases implemented by the Obama administration that resulted in lower income tax payments and a depressed business environment," said Gov. Sam Brownback (R-KS).

Kansas House Minority Leader Paul Davis, on the hand, blamed the shortfall on the tax plan coming out of Topeka, rather than the one from Washington.

"The Governor's experiment continues to harm our ability to support our schools and invest in our state's future. Kansans want a governor who takes responsibility for his policies, not one who spins the numbers and blames others for his failed experiment,” he said. Davis is challenging Brownback for the governor's seat this fall.

The Department of Revenue reported Wednesday the state's April collections were $92 million less than analysts had forecast less than two weeks ago. More than $89 million of the shortfall was in individual income taxes related to federal changes in calculating capital gains on investments and other income.

Revenue Secretary Nick Jordan blamed President Barack Obama's administration and changes made to the federal tax code that expired on Jan. 1, 2013.

“This is an undeniable result of President Obama’s failed economic policies of increasing taxes and over-regulation,” said Revenue Secretary Nick Jordan. “Our state coffers are seeing the effect of poor policy decisions at the federal level which have seen a 7.6 percent drop in exports and a slow rate of inventory replenishment.”

Jordan says other states have seen similar declines in revenue collections, including Michigan which saw revenues drop 42.6 percent.

House Speaker Ray Merrick, too, placed the blame on the federal government and used it as an example of why the state should exercise "fiscal restraint."

"This kind of unpredictability as a result of the failed leadership and increased taxes from the Obama administration exemplifies why it's imperative for state government to exercise fiscal restraint in budgeting, otherwise this situation might have caused harm to state services," said Merrick (R-Stillwell).

The April totals were announced as legislators returned to Topeka to finish work on the state budget and other issues.

Two weeks ago, analysts raised their forecast for Kansas revenue over the next 18 months by $177 million.

Negotiators are considering spending increases for the remainder of the current fiscal year and the fiscal year that starts July 1, including $5 million more for health care services for disabled residents

“It is an absolute contradiction for Governor Brownback to take credit for ‘record revenues’ back in January when the experts were saying the revenue increase would be a one-time phenomenon. But, now that we’re experiencing drastic drops in state revenue he’s blaming someone else," said Senate Democratic Leader Anthony Hensley.

“This isn’t someone else’s fault. It is a self-inflicted budget crisis that is a direct result of Brownback’s failed experiment and the people of Kansas are once again suffering the consequences."

Posted by: Nick Viviani