By Sherman Smith, Kansas Reflector
TOPEKA, Kan. — Budget analysts and economists expect cooling inflation and modest growth to push state revenues slightly higher than expected over the next couple of years, preserving a surplus cushion of billions of dollars.
The projection is expected to shape tax and budget policy when legislators return next week. The forecast is based on current tax law, excluding a tax cut package that Gov. Laura Kelly has yet to sign or veto.
The new forecast was released Thursday by the Consensus Revenue Estimating Group, which includes executive and legislative branch budget analysts, along with economists from state universities. The prediction is that revenues for fiscal year 2023, which ends June 30, will grow to $9.8 billion, which is $128 million more than expected when the group issued its last forecast in November.
That would leave the state with an ending balance of more than $1.9 billion, in addition to $1.48 billion in a rainy day fund.
The expectation for fiscal year 2024 is that revenues will continue to climb to $10.2 billion. The surplus would then be $3 billion, plus $1.6 billion in the rainy day fund.
J.G. Scott, director of the Kansas Legislative Research Department, said the forecast is based on the expectation that inflation, which reached the highest level in decades in 2022, will cool this year, and that the economy overall will see modest growth.
“It’s kind of nice to say that there wasn’t a lot of changes after some of the recent years,” Scott said. “We’ve been going through ups and downs.”
The forecast ignores Senate Bill 169, which would reduce revenues by about $1.3 billion over three years. The Legislature passed the bundle of tax policies in the closing hours of the session, and the governor has not indicated whether she intends to sign it.
The bundle includes a flat income tax rate that primarily benefits the state’s wealthiest individuals, an accelerated end to the state sales tax on food, accelerated tax cuts for corporations and residential property tax relief.
“The governor has always been focused on looking across the horizon and ensuring that we have structural balance for years to come, so we don’t find ourselves in a hole,” said Adam Proffitt, the state budget director and secretary of the Department of Administration.
