State budget experts are predicting vastly improved economic conditions in Kansas for the next few years, but also urging caution because of the unpredictable nature of the pandemic.
J.G. Scott, director of Kansas Legislative Research Department, told legislators Tuesday that tax revenues were $91.5 million over estimates that had been made less than two weeks ago when the Consensus Revenue Estimating Group held its bi-annual financial summit.
“This came as a huge surprise when we were sitting down to look at the numbers,” Scott told the Senate Ways and Means Committee. “I just want people to know not to expect $91 million every 10 days,” Scott said.
In its recently released “long memo,” state financial experts forecast good news for Kansas. “Most key economic variables and indicators have recovered significantly since the CRE (Consensus Revenue Estimating) Group last convened in November and there is broad expectation that the worst of the pandemic and associated economic downturn are behind us.”
But the group also noted that COVID-19 and new variants still pose potential threats to any economic recovery.
However, the forecast of major economic indicators has been significantly increased.
The Kansas Gross State Product, which measures the output of the state’s economy, is estimated to increase 4.7 percent in 2021; 3.7 percent in 2022 and 2.1 percent in 2023. These increases match the U.S. Domestic Product forecast and compare with the November Kansas estimate of 1.9 percent for each of the three calendar years.
Kansas Personal Income is estimated to increase 5.5 percent in 2021; 3.7 percent in 2022 and 2.1 percent in 2023; the same as U.S. Personal Income growth. And that compares with the November state estimate of 1.4 percent in 2021; 2 percent in 2022 and 1.9 percent in 2023.
The employment picture also is expected to significantly approve.
For state government, the CRE Group increased the estimate for fiscal year 2021 and FY 2022, which starts July 1, by $360 million. That gives legislators some breathing room when crafting a final budget during the current wrap-up session, but funding wish-lists may be tempered by several recent developments.
On Monday, Republican legislators overrode Gov. Laura Kelly’s veto of tax cuts. That will reduce revenue by several hundred million dollars over the next few years.
In addition, the Kelly administration released a memo that said legislators must boost higher education funding by $159 million over the next two fiscal years to satisfy federal requirements to maintain education spending levels and receive billions of dollars in COVID relief.
Additional settings for Safari Browser.
