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May 14, 2012
Legislators have not yet settled on a Fiscal Year 2013 budget, but they are close. And by all indications, that FY 2013 (July 1, 2012, to June 30, 2013) budget will balance. However, FY 2014 could look quite different.
The basic State General Fund numbers for FY 2013 are below. Both the House and Senate propose spending totals that are lower than expected income. Spending in the final budget will likely end up somewhere between the Senate and House versions, perhaps around $6.2 billion.
Things change in FY 2014 though. Under current law, the state sales tax rate will drop from 6.3 percent to 5.7 percent and a larger portion of sales tax receipts will go to the highway fund, causing State General Fund income to drop by about $425 million. However, economic growth will likely bring new revenue. Let’s do a simple calculation.
If revenue increases 4 percent — could be more, could be less — in FY 2014, enough money would come in to repeat the FY 2013 spending of about $6.2 billion and still balance the budget.
However, costs for school finance, Medicaid, higher education, KPERS, state employee salaries and normal program inflation could easily push the FY 2014 budget out of balance on the spending side. A large tax cut, like the one headed to the governor’s desk, will dramatically lower revenue if enacted and push the budget out of balance on the revenue side.
FY 2013 seems quite stable compared to the budget likely ahead in FY 2014.