The state released Friday its revised fiscal year 2011 and fiscal year 2012 revenue estimates, first released Nov. 2, 2010. Both estimates were revised downward due in large part, forecasters said, to changes in the federal tax code.
The fiscal year 2011 estimate was decreased by $10.2 million. Total tax estimates were lowered by $1.3 million and estimates for other revenues was decreased by $8.9 million.
The revised estimate for fiscal year 2012 of $5.789 billion was decreased by $21.5 million or 0.4 percent below the November estimate. The estimate for total taxes was decreased by $15.7 million, while the estimate for other revenues was decreased by $5.8 million.
Alan Conroy, director of the Kansas Legislative Research Department, said changes in federal tax laws approved by Congress in December include breaks for businesses for expenses such as the purchase of new machinery. He said they'll cost Kansas about $77 million total through mid-2012 because its tax code is tied to the federal one.
But despite downward forecasted revenues, officials said they believe Kansas will experience solid economic growth during the first half of 2012. Projections show the state taking in almost $5.8 billion in general revenues during the current fiscal year and a little more than that during the 2012 fiscal year, which begins July 1.
“We are pretty optimistic that we're on the right track right now, and I see good things for the future of Kansas in revenues," said State Budget Director Steve Anderson, one of the forecasters. "We see a growing economy."
Lawmakers will deal with the adjusted revenue projects when they return to Topeka April 27 to finalize business and approve a budget. Both the House and Senate have approved separate proposals. With the new revenue projections, the House's version of the budget would leave about $48 million in reserves at the end of the next fiscal year. But the Senate's version would result in a $23 million deficit, something prohibited under the Kansas Constitution.
By law, lawmakers are required to leave a year-end general fund balance equal to 7.5 percent of expenditures and demand transfers. Of course, lawmakers can and have circumvented that mandate.
Dave Trabert, Kansas Policy Institute President, said it’s that willingness to ignore state law in lieu of reducing expenditures that has helped deliver the state to its current fiscal situation.
During times of economic growth in Kansas, spending has nearly doubled revenue growth.
“We’ve have had a spending problem,” Trabert said. “Kansas has had spending on auto pilot. That becomes second nature but eventually, as it has done last year and this year, it will collapse.”
Past proposals for a rainy day fund or emergency funds would help cushion any substantial revenue loss. Instead of slashing spending or increasing taxes, as the state did last year, lawmakers could draw from the reserve fund.
He said the solution to the state’s financial crunch is not necessary a major slash in spending or new revenue sources. Either can be detrimental to an economy that is already fragile and lagging behind neighboring states in recovering from the recession.
It shouldn’t have to be an either-or situation Trabert said, it should be a balance of reductions in spending and discovery of new dollars, namely through making government more efficient.
Already, lawmakers are reacting to Friday’s news saying they will consider making additional cuts to an already anemic budget. That could spell greater funding reductions for senior programs, education and transportation.
But getting government to look within itself to find savings will be difficult and something that likely won’t happen this year or next.
“No body likes changes,” Trabert said.

The Associated Press contributed to this report.