State Budget Estimates Show Favorable Forecast
Karuva Kaseke | November 23, 2022
The newly released November Consensus Revenue Estimate (CRE) presented a favorable forecast for the Kansas budget for the rest of the 2023 fiscal year, which will end next June. This forecast also serves as the starting point for the Governor’s FY 2024 Recommended Budget, which is currently being developed in conjunction with agencies and will be released to the public in January.
Since the last estimate in June (an adjustment of the official April CRE intended to reflect legislation enacted through the end of the session), total expected state revenues for FY 2023 increased by $794.2 million, bringing total projected revenues to $9.7 billion. If this holds through the second half of the fiscal year, the state could close the fiscal year with an ending balance of $2.3 billion.
FY 2024 revenues are expected to exceed $10 billion for the first time, and, if Kansas keeps a consistent revenue stream and lawmakers refrain from hefty tax cuts for the wealthiest Kansans, the state could see the state ending the next fiscal year with a $3.2 billion surplus.
Aside from being far better than a deficit, a budget surplus also provides opportunities to make impactful investments to policy objectives that may have previously been out of reach. For example, the FY 2022 surplus enabled the Legislature to begin reducing the sales tax on food and create a more structurally stable budget through the early elimination of state debt, payments to KPERS to bring the fund closer to full funding, and deposits into the state’s Rainy Day Fund to prepare for potential economic downturns.
All of these put the state in a better position to weather challenging times and enact more legislation to help Kansas children and families, particularly those who are facing difficulties in ensuring their children have enough food to eat, a safe place to sleep, and reliable transportation to get to work and school.
So what does this forecast actually tell us?
We are not entirely out of the woods. While the Kansas economy is projected to continue growing in the upcoming year, increases in global inflation as well as fluctuations in energy and commodity prices could still hit Kansas hard. Higher-than-normal inflation is part of the cause of the high revenues we’ve seen in the past year, and we should expect to see more increases in the near future, as a normalization would naturally decrease revenues. Employment across the state is also still stabilizing, with about 17 percent of jobs lost in 2020 yet to be recovered and increased vacancies due to a slightly decreased labor force.
A strong and well-guarded Rainy Day Fund is more important than ever. With the economic uncertainty across the nation and world, Kansas finally has a decent amount of funds stored in case revenues decline and state operations need them to continue providing vital services. The projected surplus is not guaranteed, and emergency funds should continue to be saved, even when tapping into them prematurely looks enticing.
Kansas lawmakers have another chance at surplus spending that will have a positive and measurable impact on the lives of everyday Kansans. The precautions already baked into the forecast leave flexibility to address some of the glaring needs in the state, including:
- The shortage of child care providers and affordable options for families;
- The increasing teacher shortage across the state;
- The insufficient state minimum wage and inadequate wage growth for low-income workers; and
- The lack of targeted property tax relief for all low-income households, including renters who are currently excluded from all existing programs.
As new and returning lawmakers prepare for the 2023 legislative session, we urge them to prioritize funding for impactful policies that help families put food on the table, provide a safe and nurturing environment for kids during their early development, make health care more accessible and affordable, and put economic stability within reach of all Kansans.< Back to the news list