Monday, October 20, 2014

HAWVER: No news might have big impact

By MARTIN HAWVER, At the Rail | 4/22/2013

Sometimes no surprise is the surprise.

Remember last Tuesday, when I told you that a certain group of intense legislative-watchers were awaiting a pronouncement by the state’s top fiscal gurus from the Consensus Revenue Estimating Group assessment on what last year’s massive tax cuts would do for the state budget?

Sometimes no surprise is the surprise.

Remember last Tuesday, when I told you that a certain group of intense legislative-watchers were awaiting a pronouncement by the state’s top fiscal gurus from the Consensus Revenue Estimating Group assessment on what last year’s massive tax cuts would do for the state budget?

Well, we all wore clean shirts and were ready, but that pronouncement — key to wrapping up spending and taxing bills this legislative session — yielded essentially no surprise. No appreciable rise in state revenue, no plummeting state revenue — just about what the estimating group predicted in November, and on which Gov. Sam Brownback based his budget for the fiscal year that starts July 1.

In November, the group predicted a drop in income taxes as a result of last year’s tax cut bill. It was dramatic — all told about $1 billion less than was received in the previous fiscal year — but last fall’s estimate was essentially confirmed by last week’s estimate.

It apparently is still too early to tell whether those tax cuts mean expansion of the state’s economy, more jobs and more wage-earner income taxes flowing into the state treasury. It might happen in the next year or two, but lawmakers have to put together a budget and tax plan by mid-May for the fiscal year that starts July 1.

So, no real news (oh, about $20 million more revenue expected, but in a $5.5 billion State General Fund budget, $20 million is chump change) for lawmakers to react to when they reassemble May 8 to wrap up the budget and tax policy.

And the no-surprise estimate means the battle over continuation of the penny sales tax — which expires June 30 and the death of which is computed into the fiscal group’s estimate — will continue.

If revenues had been down more than expected, the sales tax might have been seen as the only way to balance the budget without a new round of severe spending cuts. If revenues had risen significantly, Brownback would have been applauded, and ironically, his sales tax continuation might have lost steam. It still is too early to tell, however, just how this tax cut business will work out.

So, no news is news in that the end-of-session tax/spend battle continues with little in the way of new information for each side’s bargaining strategy. It means what might have been a simple wind-down to the year’s Legislature won’t happen.

That means every issue that involves dollars and every issue that relates to the governor’s ongoing effort to reduce income taxes will continue, and everything from K-12 spending and higher education spending to social services and how much money can be pulled from the Kansas Department of Transportation is still in play.

The news: That nothing has changed.

Look for a tough wrap-up session.

Martin Hawver is publisher of Hawver’s Capitol Report. Visit his website at www.hawvernews.com

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