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Economy

Kansas Revenue Estimating Group Set To Meet Amid Controversy

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Stephen Koranda
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KPR/File photo

A handful of university economists and state officials are meeting behind closed doors in Topeka today. Their objective is to come up with an accurate estimate of how much tax revenue Kansas will collect over the next year.

It’s a process the state has used since the late 70s for budgeting purposes--but it’s suddenly become controversial.

The last time the Consensus Revenue Estimating Group met, the news wasn’t good.

“The overall estimate for 2016 and 2017 was decreased by a combined $353.6 million," Raney Gilliland, director of the Kansas Legislature’s research department, said during a media briefing after last November’s meeting.

It’s become an all-too-familiar pattern: The group meets and lowers its revenue target, but going forward, tax revenues continue to fall short of even the lower estimate.

Republican Gov. Sam Brownback insists a sluggish economy is to blame for the shortfalls--lower crop and oil prices in particular. And, he says, the consensus estimating process itself may be at fault. His office recently announced that it was reaching out to experts in other states for advice on how to fix it.

But former Kansas Budget Director Duane Goossen says the Kansas system doesn’t need fixing.

“Revenue estimating is never going to be perfect," Goossen says. "It’s never going to be to the dollar.”

Goossen is a former Republican legislator who served as budget director for 13 years under governors of both parties. He says Brownback’s criticism of the revenue estimating process is an attempt to divert attention from the damage being done by his income tax cuts.

“If Kansas had not changed income tax policy in 2012, if businesses were still paying taxes on their business income, if rates had not changed, Kansas would be collecting more than $1 billion a year more now than we are," he says.

Researcher Elizabeth McNichol also says the tax cuts, not the estimating process, are likely to blame for revenue shortfalls.

“If you look back at their accuracy of the estimates, even up to and including the Great Recession, Kansas was doing fine. So, the thing that changed was this really large tax cut, this big policy change," she says.

McNichol works for the Washington, D.C.-based Center for Budget and Policy Priorities. A couple of years ago, she wrote a report evaluating the estimating processes used by all 50 states. She says Kansas has one of the best because it produces a single revenue number that both the governor and lawmakers agree to use for budgeting.

“A consensus process that brings both the legislature and the governor’s side in and also outside experts is the best way to come up with a state revenue estimate," McNichol says.

In some states, the governor and legislature fight over both how much they have to spend and what to spend it on. But in Kansas, the law requires the executive and legislative branches to resolve their differences--at least on the revenue number--behind closed doors as a part of the estimating process.

And Gilliland, the legislature’s top staffer, says over time that system has worked pretty well.

“It can take some time for those discussions to occur," he says. "But it’s not hostile, it’s always amicable.”

But when the numbers are off, as they have been, it causes big problems. It forces the governor and lawmakers to cut spending, raise taxes or do both to balance the budget.

Last year, with Brownback threatening to veto any attempt to roll back his signature income tax cuts, lawmakers reluctantly voted for big increases in sales and cigarette taxes to close the session.

The memory of those final votes has legislators anxiously awaiting today’s news, with many saying they’ve been told to expect the revenue estimate to once again be lowered--perhaps by hundreds of millions of dollars.