(Reuters) - Kansas on Thursday increased tax revenue estimates for the current fiscal year as well as the next two by a total of $156.4 million from a previous November projection as the state struggles with budget deficits.
For fiscal 2017, which ends June 30, the estimate was boosted by $62.5 million, while projections increased by $42.9 million for fiscal 2018 and $51 million for fiscal 2019. Reasons for the rosier outlook were not immediately available from Governor Sam Brownback’s office.
Tax cuts enacted in 2012 have gouged a hole in the Kansas state budget. After months of falling short of estimates, tax revenue met or exceeded projections between November and February, before slipping below estimates in March.
Brownback on Tuesday signed into law a bill that plugs a $280 million hole in the state’s current budget largely by borrowing money from a state investment fund.
The measure, which passed the Kansas legislature on April 6, taps $317 million in unclaimed property fund money held by the Kansas Public Employees Retirement System. The money, which will be transferred to the state’s general fund over two years, would be returned over six years beginning in fiscal 2019.
Prior to the new revenue estimate, the budget gap for the next two fiscal years was pegged at about $1 billion.
A move in the state legislature earlier this year to increase revenue by raising tax rates and eliminating a business exemption failed when the Senate was unable to override the Republican governor’s veto.
Complicating the state’s finances is a March 2 state Supreme Court ruling that found the school funding system falls short of a constitutional requirement for adequacy. The ruling, which set a June 30 deadline for the enactment of a constitutional funding method, could require Kansas to increase school funding by more than $500 million each year.
Moody’s Investors Service and S&P Global Ratings have said the ruling will put increased pressure on the state’s already shaky finances.
Reporting by Karen Pierog, editing by G Crosse