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November 15, 2012
A large State General Fund (SGF) deficit looms for fiscal year 2014. The recent consensus revenue estimate forecasts receipts of $5.464 billion, but the current level of spending — $6.198 billion — already exceeds that by more than $700 million.
However, recent public discussion about the FY 2014 deficit has focused on a lower number: $328 million. Soon after the completion of the revenue estimate, the Kansas Legislative Research Department released a SGF Profile showing that $328 million in spending reductions must be applied in order to keep the ending balance at zero, far below the 7.5 percent ending balance required by Kansas law. At the Nov. 14 Legislative Budget Committee meeting, Legislative Research handed out an updated SGF Profile that pegged the number at $302 million. It’s important to note, though, that both of those numbers assume that the state would spend the entire SGF bank balance of approximately $470 million down to nothing.
Spending the bank balance in FY 2014 could help lawmakers manage the budget next year, but that solution is short-term and does not fix the deficit. Spending levels would still significantly exceed receipts for the year. The deficit problem would again be present for the FY 2015 budget, but without the cushion of a bank balance to help soften spending cuts.
Ultimately the larger $700 million-plus deficit can only be corrected by making receipts and expenditures line up or “balance” through revenue increases, spending cuts or a combination of both.