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November 7, 2012
The Consensus Revenue Estimating Group completed work Tuesday and issued its forecast. The group predicts fiscal year 2014 State General Fund receipts at $5.464 billion, a whopping $707 million less than current spending levels. That makes the next round of budgeting very hard work for policymakers.
Fortunately, the SGF will begin FY 2014 with about $470 million in the bank. However, even adding that healthy beginning balance to the estimated revenue does not provide enough resources to cover current programs. To simply keep the ending balance at zero, $237 million would still need to be cut.
Let’s look more closely at the budget math in the table below.
As expected, the estimate reduces tax receipts to reflect the expiration of the current 6.3 percent sales tax rate and lowers individual income tax receipts to account for the full effect of the new income tax law. The SGF would collect about $400 million more in FY 2014 if the 6.3 percent sales tax rate remained in place and about $800 million more if the income law had not been passed. Together, that’s a $1.2 billion revenue swing in one year.
Interestingly, the new FY 2014 revenue forecast closely matches the estimates that the Kansas Legislative Research Department made in May when trying to predict the effect of the income tax law. Page 2 of the attachment shows the much-quoted Legislative Research SGF profile that projected the effect of the tax cut through FY 2018. The column for FY 2014 looks a lot like what the state now faces.