DALLAS – Kansas higher education and Medicaid took further hits Wednesday as Gov. Sam Brownback slashed spending by nearly $100 million to match falling revenues.
Budget director Shawn Sullivan, who announced the cuts, said that revenue continues to underperform the official forecast, explaining the problem as part of a weakened state economy.
Critics of Kansas' tax cuts in 2013 say the falling revenues demonstrate that Brownback's promises to stimulate economic growth through lower taxes have failed.
"The Kansas budget has been structurally unbalanced every year since the 2012-2013 tax cuts went into effect, putting the state in a highly precarious financial situation," former state budget director Duane Goosen wrote in a recent blog post. "Budget actions in this legislative session did not address or correct that. The state's grim financial prognosis will persist until the underlying problem gets fixed."
After passing a $6.3 billion general revenue budget that did not balance, the Kansas Legislature left it up to Brownback to reduce spending.
Moody's Investors Service shifted its outlook on Kansas' Aa2 credit to negative May 3 as a reflection of the state's inability to maintain a balanced budget.
Standard & Poor's Global Ratings placed the state's AA-minus rating on its downgrade watch list on April 25 with a negative outlook.
Kansas has about $4.7 billion of tax supported debt outstanding, according to Moody's.
In 2015, Kansas issued $1 billion of pension obligation bonds to take advantage of low interest rates and reduce its unfunded liability. But Brownback's latest budget message included withholding of a pension fund payment to the Kansas Public Employees Retirement System.
"The three main drivers of budget growth continue to be education, Medicaid and KPERS," Brownback said in a statement. "We are working to slow the growth of government spending and our projected FY 2017 expenditures are less than FY 2015 actuals. Kansans cannot afford the explosive growth of state government spending that has occurred in the past."
State agencies will take a 4% reduction under the allotments made by Brownback. Agencies that are exempt from the cuts include the Department of Corrections, Kansas Bureau of Investigation, the Kansas Highway Patrol and state hospitals.
The University of Kansas and Kansas State University plan to increase tuition after cuts in revenue. Kansas will avoid spending about $30 million through reduction of the Kansas Board of Regents budget.
The state's Medicaid program will see a 4% cut in reimbursements. The provider cut is forecast to save about $38 million. Other changes will increase the total to $57 million.
The cuts include a $150 million sweep of the state highway fund.
After the latest cuts, the state is expected to have an $87.5 million ending balance during the next fiscal year beginning July 1 if the state meets its revenue projections.
The bulk of the $97 million spending reduction comes from cuts to KanCare, the state's Medicaid program.
