Kansas on Monday slashed its projections for what it expects to collect in taxes by nearly $1.37 billion to reflect the economic damage associated with the coronavirus pandemic.
State officials, legislative researches and university economists issued a new, far more pessimistic fiscal forecast for state government than one Democratic Gov. Laura Kelly and the Republican-controlled Legislature used to craft the next annual state budget.
The new forecast predicts that Kansas will collect less than $6.9 billion in tax revenues during the budget year ending June 30. That’s nearly $816 million, or 10.6%, lower than the previous projection made in November of $7.7 billion.
For the 2021 budget year that begins in July, the new prediction is that the state will collect less than $7.4 billion in taxes. That is $549 million, or 6.9%, less than the $7.9 billion previously predicted.
J.G. Scott, the director of the Kansas Legislative Research Department, said the new numbers reflect a “collapsing” labor market.
Kelly had anticipated bad news. She announced Monday that she has directed state agencies to avoid filling open positions not essential to dealing with the coronavirus pandemic and to eliminate discretionary spending as she and other officials brace for a more pessimistic fiscal forecast.
Kelly issued a stay-at-home order for all of the state’s 2.9 million residents that took effect March 30, and Kansas has seen a surge in claims for unemployment benefits from jobless workers since mid-March.
The Democratic governor and Republican-controlled Legislature expect those moves to cut into state revenues. Kelly also delayed this year’s income tax filing deadline three months, to July 15, and that move will lessen revenues in the short-term.
Kelly said Monday that besides directing agencies to hold positions open and end discretionary spending, she directed them to avoid expanding non-essential programs and to avoid proposing pay increases for employees. She said agencies will begin this week to develop detailed budget plans.
“Some impacts of this economic crisis won’t be felt right away,” she said. “Although we hope for the best, we are preparing for the worst.”
The state’s current fiscal forecast was issued in November and projected general tax revenues of $7.7 billion for the current budget year and more than $7.9 billion for the 2021 budget year.
State finances had been in relatively good shape going into the pandemic. The state expected to have $927 million in cash reserves on June 30, and tax collections were running 3.2% ahead of expectations for the current budget year.
