Tax Study Released Today

A new study on the ramifications of lowering the state income tax was released today at a statehouse news conference. Bernie Koch, executive director of KEPC, and study author Dr. John Wong presented findings at the statehouse today. The study finds that, for every 1 job created, 1.63 are lost due to study released today finds that a lowering of the income tax would result in a loss of 1.63 jobs due to a reduction in overall state spending. The study was commissioned by the Kansas Economic Progress Council.

The press release is available here, and the ful text of the study is available here.

Dr. Wong’s slide deck is available here.

KEPC UPDATE: Revenues on target? September surprise? Impact of cuts on schools?

In this issue …

  • Will Kansas September revenues hit the target?
  • September surprise for the budget from education?
  • Survey of school districts looks at impact of cuts

 

Will Kansas September revenues hit the target?

September will be a key month in predicting whether Kansas tax revenues will meet, surpass, or fail to live up to official expectations. That’s because Monday was the deadline for taxpayers to file their quarterly estimated tax. It was the first filing of Kansas estimated tax since the 2015 Kansas fiscal year began July first.

Thus, it could be a major indicator of whether Kansas will meet revenue estimates that were used to build the 2015 budget.

Estimated taxes are paid quarterly on income that is not subject to withholding. It can be income tax on interest, dividends, alimony, gains from the sale of assets or an amount you pay if the income tax being withheld from your salary, pension, or other income is not enough.

As former Kansas Budget Director Duane Goossen said in his September 8th blog:

“For taxpayers making quarterly income tax payments, the third quarterly installment is due in September. Quarterly payment amounts in April and June were significantly below previous years. Low quarterly payments in September could easily cancel revenue gains that might come from sales tax or corporate income tax.”

When revenues dropped severely below expectations this spring, the Brownback Administration blamed the policies of the Obama Administration. Many states experienced revenue slowdowns, but were warned by the Rockefeller Institute that taxpayer behavior driven by the prospect of a “fiscal cliff” could result in shortages as investors cashed in their stocks at the end of 2012 to avoid higher taxes.

 

September Surprise for the budget from education?

Another deadline is looming that could cost the Kansas 2015 budget.

September 22 is the official date used to determine public school enrollments in Kansas which determine state funding. Official estimates used to build the K-12 education budget could be challenged by higher enrollments, particularly in the at-risk weighted category.

There are rumblings that the legislature used enrollment estimates that were too low. That could lead to next year’s legislature considering supplemental education funding to make the numbers work for the K-12 budget.

Some behind-the-scenes guesstimates in education circles peg the shortage at somewhere north of $15 million.

If the number of at-risk and other weighting students does increase, the state has these choices:

  • Find revenue in an already blown budget to increase K-12 funding.
  • Use the same amount of funding already in the budget but decrease each school district’s share.

The growth of at-risk funding in Kansas was explored in an August report by the Kansas Association of School Boards entitled, “At-Risk Funding in Kansas: Free Lunch Status and At-Risk Status.”

The report suggests that the increases are being driven by Hispanic students in Kansas schools:

“Taking into consideration that Hispanic students show higher participation rates than black or white students, this data suggests the percent of free and reduced-price lunch eligible students will continue to increase in the coming years as the percent of Hispanic students in the state increases. KASB enrollment projections suggest Hispanic students could make up almost 22 percent of the total student population by the 2018-19 school year.”

A school district’s General Fund Budget is determined by taking the total adjusted weighted enrollment of the district, times the base state aid per pupil (BSAPP).

For FY15, the BSAPP is scheduled to be $3,852.

Adjusted weighted enrollment, is calculated by taking the district’s adjusted full time equivalency (FTE) enrollment and adding at-risk four year old pupils, vocational program weighting (CTE), bilingual program weighting (ESOL), at-risk program weighting, high density at-risk weighting, new facilities weighting, transportation weighting, virtual school weighting, special education weighting, low or high enrollment, and if applicable, ancillary school facilities weighting, cost of living weighting and/or declining enrollment weighting.

You can read the entire report here.

 

Survey of school districts looks at impact of cuts

Meanwhile, a detailed survey of Kansas school districts by the Kansas Center for Economic Growth gives an overall picture of what’s happened to public schools due to state funding cuts which have already taken place.

The study, entitled, “Quality at Risk: Impact of Education Cuts,” came up with these major findings about how cuts are affecting educational outcomes and programs:

  • More students, but fewer teachers – Since 2009, Kansas schools have gained more than 19,000 students but have 665 fewer teachers. More than a quarter of school districts expect higher enrollment in 2015.
  • Classrooms are getting more crowded – Almost half of districts have seen their average class size grow since 2009.
  • Funding per pupil is insufficient and declining – 96 percent of districts say base state aid per pupil for 2015 will be insufficient and say it has not kept up with increased costs to run schools.
  • More at-risk students, but less funding – Lawmakers cut millions of dollars earmarked for students at risk of falling behind or failing, even as the number of such students grew.
  • Less training for teachers – Since 2009, cuts to programs that help teachers learn innovative teaching methods to improve student learning have averaged more than $41,500 per district.
  • Higher property taxes – Almost 60 percent of districts will have to rely on more local funding to make up for cuts in state resources. Almost half of districts ask parents to purchase basic classroom supplies because the districts cannot afford to provide them.
  • Dwindling cash reserves – Most districts have seen a decline in cash reserves after 2009 and expect declines through 2015.

The Center is a think tank/research organization.   We at the Kansas Economic Progress Council often collaborate with the Center on projects.

You can read the entire report here.

KEPC UPDATE: KDOT projects; Kansas Fairy Tale

In this issue … KDOT announces projects for next two years but will they hold? A Kansas Fairy Tale   KDOT announces projects for next two years but will they hold? This week, the Kansas Department of Transportation announced road and bridge projects for the next two years, including 464 highway projects, 194 bridge/interchange projects, […]

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KEPC UPDATE: Koch op-ed, $238M shortfall in 2016, contractors aim to protect transpo funds

In this issue … Charles Koch op-ed in USA Today links to study critical of state tax cuts Kansas faces $238 million shortfall by July of 2016 Contractors launch program to protect transportation funds  JOIN KEPC TODAY – STAY AHEAD OF THE LATEST NEWS   Charles Koch op-ed in USA Today links to study critical […]

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KEPC UPDATE: Standard & Poor’s lowers KS bond rating

Citing Kansas income tax cuts and a “structurally unbalanced budget,” Standard & Poor’s rating services has announced a one-level downgrade of its issuer credit rating (ICR) for the State of Kansas. S&P also announced a double-notch downgrade of Kansas’ appropriations-secured debt. In a news release, the service said, “The outlook on both ratings is negative.” […]

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KEPC UPDATE: WSU study questions cuts, rural roads more dangerous

In this issue … Wichita State study questions cutting taxes to grow the economy Kansas rural roads more dangerous   Wichita State study questions cutting taxes to grow the economy A detailed scientific study by two Wichita State economists questions cutting taxes as a way to boost state economies.  The research was published nationally in […]

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KEPC UPDATE: Revenue drop meaning; Nobel Prize winner critiques tax plan

In this issue … What the revenue drop means Nobel Prize winner criticizes Kansas tax cuts   What the revenue drop means The announcement that June revenues for the State of Kansas were $28 million below estimates brings the state close to a zero ending balance for the Fiscal Year that began this week. The […]

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KEPC UPDATE: State borrowing; Jordan: Revenue drop in June; Fiscal Cliff/Capital Gains; Medicaid expansion

State borrowing nearing Great Recession level Jordan says revenue will drop again in June Memo hints revenue drop was not all fiscal cliff/ capital gains Medicaid expansion with a Kansas twist   State borrowing nearing Great Recession level Former Kansas Budget Director Duane Goossen told a meeting of the Newton Area Chamber of Commerce last […]

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KEPC UPDATE: Leaders misstated economic research; Huge budget implications

In this issue … Kansas leaders misstated economic research according to quoted economist Goossen: hard decisions are close, budget implications are huge   Kansas leaders misstated economic research according to quoted economist An economist with the Rockerfeller Institute of Government at the State University of New York says Kansas officials have misrepresented her research about […]

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KEPC UPDATE: Ending balance shortfall, tax bills TMI, changes to PEAK

In this issue … Ending balance preview shows FY 2016 shortfall Tax bills-probably more than you want to know Changes to PEAK (Providing Employment Across Kansas)   We are still wading through the legislation produced by the 2014 Kansas Legislature and will have a final overall report on its activity sometime after the sine die […]

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KEPC UPDATE: Veto underway, revenues plummet, tax conference, Moody’s downgrade

In this issue … Veto session underway Revenues plummet Tax conference Moody’s downgrades Kansas bonds   Veto session underway The Kansas Legislature’s veto session is underway with House and Senate leaders aiming for as short a clean-up as possible, even to the point of rushing the budget bill, which has never been debated in the […]

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