KS, MO Both Facing Major Budget Shortfalls

The State of Kansas is predicting major budget shortfalls due to income taxes not being filed until the next fiscal year, and Gov. Laura Kelly has announced that no new positions will be filled with the state and all discretionary spending will be cut, among other measures.

The news comes as the Kansas Policy Institute predicted a worst-case scenario budget shortfall of $1,9 billion in Kansas through July 2021 and a downturn of $3.5 billion in Missouri, using data from Moody’s.

KPI sees a peak jobless rate of 13 percent by the second quarter of this year and 10 percent GDP decline of 10 percent under moderate conditions, while a severe scenario puts those numbers at 17 percent and 14 percent, respectively.

Meanwhile, on the Kansas side, a group of economists says that there could be a loss of $1.3 billion in tax revenue over the next two years, according to the Topeka Capitol-Journal, and that for this fiscal year, tax-revenue collection would be down by $815 million.

The next fiscal year is predicted to start with a revenue shortfall of $549 million, all related to financial complications due to COVID-19. Due to these issues, the state budget surplus of $925 million is expected to be wiped out.

On top of this, it is against the Kansas State Constitution to have a budget deficit, leaving the state’s financial planning in a major bind.