Kan. group cuts revenue forecast $235M

Eds: UPDATES with more details on revised fiscal forecast, reaction from governor, legislators; RESTORES background from earlier versions. Moving on general news and financial services.

By JOHN MILBURN

Associated Press Writer

TOPEKA, Kan. (AP) -- A group of economists and policy-makers slashed Kansas tax collection estimates Thursday by $235 million, reflecting signs of continued weakness in the state economy.

The new forecast for the remainder of the state's 2010 fiscal year through next June 30 means Kansas government will have 4.2 percent fewer tax dollars to finance services, including public education, than previously estimated in April. Kansas began its fiscal year July 1.

That means Democratic Gov. Mark Parkinson and legislators will have to trim as much as $460 million from the budget approved earlier this year to break even. The Kansas Constitution prohibits the state from ending a fiscal year in debt.

"The recession in Kansas is not over in the current fiscal year," said Alan Conroy, director of the Kansas Legislative Research Department and member of the estimating group.

Parkinson issued a statement, calling the forecast a a challenge, but manageable.

"In the coming weeks, I will take whatever steps are necessary to balance the 2010 budget before the Legislature returns," Parkinson said in a statement. "That is a promise I have made, and it is a promise I will keep."

He said all he asked in return was for legislators from both parties to act "like civil adults" and work together to solve the budget. He gave no time frame for announcing his reductions.

Budget Director Duane Goossen said Parkinson would be looking at making close to $260 million in cuts, a lower figure that doesn't include additional money for schools with increased enrollments, lower property tax valuations or additional funding for students in poverty.

Forecasters did project a 2.5 percent increase in tax revenues for fiscal year 2011, but cautioned that the growth will be slow coming as Kansas continues to feel the effects of the recession.

Raising taxes to close the gap isn't an option for a number of reasons, said Sen. Jay Emler, chairman of the Senate Ways and Means Committee. While tax increases aren't a good solution in a recession, he said the impact of those cuts would come too late to solve the immediate problem.

"It's a tremendous hole. I don't envy the governor at all," said Emler, a Lindsborg Republican.

More than half of Kansas' tax revenues -- nearly $3 billion under the current budget -- go to the state's 293 school districts as aid. Republican legislators who draft the state budget say they don't see how Parkinson can cut the budget any further without taking a bite out of education.

The state has seen four rounds of cuts and other adjustments this year to keep the budget balanced, and the last revisions were imposed by Parkinson in July. Public schools have lost $130 million, and their base aid per student dropped by $215, or 4.8 percent.

Kansas law allows Parkinson to impose cuts when legislators are out of session, as they have been since early June. But he also could wait until legislators reconvene, then have them debate budget revisions. His predecessor, fellow Democrat Kathleen Sebelius, did that in 2008 and 2009.

Complicating matters are new estimates for how much the state must increase spending on education and social services to meet legal obligations, such as Medicaid payments, increased student enrollments and a decrease in property valuations.

The education portion alone accounts for $143 million to maintain the current base per pupil spending level of $4,218. But policy-makers said it was unlikely that schools would see that increase and that they should expect further spending reductions.

Mark Tallman, spokesman for the Kansas Association of School Boards, said districts have been bracing for the bleak revenue picture. He said cuts in education would result in fewer districts, schools and teachers in the coming year.

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On the Net:

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