Tuesday, September 02, 2014

Revenue news painful to hear, legislators agree

By DYLAN LYSEN, Herald Staff Writer | 5/5/2014

Kevin Jones described the state’s $93-million drop in revenue for April in one word — “Ouch.”

During Saturday’s legislative coffee, the Franklin County statehouse delegation — state Reps. Jones, R-Wellsville, and Blaine Finch, R-Ottawa, along with state Sen. Caryn Tyson, R-Parker — said they were upset by the news of the significant decline detailed in April’s revenue report, which compared tax revenue from this year to April 2013.

Kevin Jones described the state’s $93-million drop in revenue for April in one word — “Ouch.”

During Saturday’s legislative coffee, the Franklin County statehouse delegation — state Reps. Jones, R-Wellsville, and Blaine Finch, R-Ottawa, along with state Sen. Caryn Tyson, R-Parker — said they were upset by the news of the significant decline detailed in April’s revenue report, which compared tax revenue from this year to April 2013.

Gov. Sam Brownback blamed the $92.8 million loss in revenue on President Obama’s tenure, while likely Democrat nominee for the gubernatorial election House Minority Leader Paul Davis, D-Lawrence, blamed the drop on Brownback’s tax plan.

The news came as a shock to the Legislature, Tyson said, because two weeks ago a different report painted a rosier picture of the state’s finances. The Legislature can address the problem by looking at duplicate spending and cleaning up certain areas, she said.

“It is a problem,” Tyson said. “We had been told previously, a week or two before that, that we were $80-something million up in revenue for the state. So can you imagine two weeks later that to hear the news not only are you down to zero, you’re negative-$90-something million. It definitely changed the discussion in the veto session.”

So who’s to blame for the decline?

The answer is more complex than simply pointing to Obama or Brownback, Finch said.

“Back in 2012, there was a concern that capital gains taxes would be going up the next year,” Finch said. “Because of the budget shutdown and the duel between Congress and the president, they ended up coming to an agreement to keep capital gains taxes the same. So there was no tax increase at the federal level. But many investors went ahead and cashed in some gains in 2012 just to go ahead and get them at what they then knew was at the rate.

“What that meant was in April of 2013 when those people filed their taxes, they paid a lot of taxes. So there was more money coming in in April 2013 than people normally saw. Fast-forward a year to April 2014 and now you don’t have the same revenue you had in 2013 because that was a windfall. If you get a Christmas bonus, you can’t project that you’re going to make the same in January that you made in December.”

Finch said the issue boils down to more than one simple answer, and that economies have several factors dictating the forecast.

“Some of that is the record windfall that we just didn’t quite forecast for properly, and some of that is the cut to income taxes in the state of Kansas,” Finch said. “So it’s a combination of factors. In economics, it’s always more than one factor.

Because of the revenue decline, Finch said, the state cannot sustain spending levels outlined in the 2015 budget.

“We really need to begin changing some things fiscally at the state level based on the fact that revenues are going to continue to — even if they stay steady — are going to be down, and they are going to be down significantly enough that we can’t sustain the type of spending that was passed in the budget this year,” Finch said.

The state’s budget itself was a point of contention at the coffee as well. All three Franklin County legislators voted against the recently passed $14.6 billion budget plan for 2015 — Senate Substitute for House Bill 2231. Democrats opposed the state income tax structure, and some conservative Republicans wanted to use the budget bill to defund Common Core curriculum standards used in Kansas schools, according to the Wichita Eagle.

The bill puts $360 million into the Department of Corrections budget, which was leftover from the year before when Brownback vetoed some of the budget in 2013. It also gives about 38,000 state employees a one-time $250 bonus instead of a pay raise, according to the report.

Finch couldn’t support the budget bill because it includes a $275-million increase when indicators tell him the state doesn’t have the revenue to cover it, he said.

“I don’t think we can call ourselves fiscally conservative and then go and vote for budgets and spending packages and tax packages that blow holes into our state financial situation,” Finch said.

Tyson agreed, noting she voted against the bill because fiscal responsibility was her main concern. Spending increases for the Kansas Department of Corrections are needed, she said, but ultimately the process with which the bill passed — through “bill bundling” — made her uncomfortable.

“We’ll end up seeing bills, we had one tax bill that had six bills in it ... six bills in one package is a lot to digest,” Tyson said. “We get the budget within two days, sometimes we don’t even get that long to look at it and to digest. So we get to look at the numbers very quickly and make a decision as to whether we’re an up or down vote.”

Though some spending increases would have helped his district, Jones said, he couldn’t agree with a lot of proposals in the proposed budget.

“It’s real simple, when you look at it and we can’t afford it you go, ‘What are we doing?’” Jones said. “There are good things in there that I really need for my district, and then there are things that are like we are walking off a cliff. At some point you have to say, ‘What’s the wise thing to do here?’”

What Jones wants to get right is fiscal responsibility, he said.

“It’s something I really want to get right at the state level,” Jones said. “When it came down to it and I’m looking at the numbers in the later years, it just didn’t add up.”

comments powered by Disqus