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Budget Negotiations and Ending Balance

May 09, 2011 J

Just a quick note on this Monday morning of the final week of the legislative session in which the House and Senate still appear to be far apart in coming to an agreement on the Fiscal Year 2012 budget.

The focus of the negotiations has shifted to how much of an ending balance the state should have. In a nutshell, the Senate wants an ending balance of about $5 million…the House is looking more in the range of $50 million. Obviously in comparison the House conferees position dwarfs that of the Senate but what else is new? However even a $50 million ending balance keeps us on shaky ground. Think of it this way, a $50 million ending balance would be less than one percent of expenditures and as most of you know, state law requires an ending balance of 7.5% of expenditures.

It’s important to keep in mind that the budget is crafted based on revenue estimates as determined by the Consensus Revenue Estimating Group. Last month the group revised their revenue estimate numbers for FY 2011 and FY 2012. There were a couple of items that stuck out to me. The group estimates that individual income tax receipts will increase by 5% and sales tax receipts by 4.5% from 2011 to 2012. The individual income tax numbers are particularly troubling to me. According to the Bureau of Labor Statistics Kansas lost 10,700 private sector jobs from February 2010 to February 2011. Go back two years to February 2009 and Kansas has lost a staggering 60,000 private sector jobs. I’m not seeing the private sector exactly leapfrog out of the economic downturn. My point being that the revenue estimates may prove to be too high, thus the ending balance agreed upon this week should be as high as possible.

If you attended the Not Yours To Give rally on the 29th you heard about a budget proposal being offered in the House Appropriations Committee to with some exceptions, freeze 2012 spending at 2011 levels. The amendment offered by Representatives Owen Donohoe, Anthony Brown, and Kasha Kelley failed to make it out of committee. A second amendment was then offered by Representative Gene Suellentrop that would have set the ending balance at close to $100 million or nearly doubling what the House position is now. This was a good amendment as well but it failed on an 11-9 vote. Keep in mind that the Suellentrop amendment recommended reducing the increase in state general fund spending. Not an overall cut, but a reduction in the increase.

Now in the final week the fear is that the House and Senate conferees will settle on a budget that has an ending balance somewhere between $5 million and $50 million. That after all, is the type of “compromise” often sought in a conference committee. But the next couple of days provides the final opportunity to let your voice be heard regarding the budget proceedings. Contact your legislators today (1-800-432-3924) and ask them to hold out, hold out for an ending balance that at least equals $100 million, again a reduction in the increase in spending that’s being debated now. It may not be what ultimately passes but your voice as always, needs to be heard.

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