It should be enough to make the losers in Kansas legislative races grateful tonight.

Kansas government is in for tough times – slumping revenue, budget cuts and hard decisions for lawmakers – according to budget forecasts released Tuesday.

 

State government will face a $136 million deficit in this year’s budget, according to the prediction. The picture is even bleaker for next year. If nothing is done, the shortfall between state revenues and expenditures will hit nearly $1 billion in the fiscal year 2010 budget, which goes into effect next July.

 

Budget jargon aside, the news is bleak, bad “with a capital ‘B’” according to Kansas Legislative Research Director Alan Conroy, a member of the panel. It’s also the clearest sign yet that Wall Street’s troubles have hit the Statehouse.

 

Unless legislators find new revenue by going back on commitments or raising taxes they’ll have no choice but to slash the budget. It will be up to Gov. Kathleen Sebelius, a Democrat and state legislators to determine where the cuts will be made, and how they impact state services. Unlike the federal government, the state cannot operate on a deficit budget.

 

Much of the budget’s problem comes from a predicted slowdown in individual income taxes. The decline reflects Wall Street losses and their impact on state capital gains taxes. Fewer capital gains by investors, less tax revenue for the state.

 Work is underway on a revised budget designed to address the problems, according to state budget director Duane Goossen. That budget recommendation will be presented to lawmakers in January. In the meantime, legislative committees will meet with state agencies to discuss their budget ideas.

 

Sebelius had already asked most government agencies – but not public schools – to look at 2 percent budget cuts (worth about $42 million) this year and 5 percent cuts next year. Based on Tuesday’s forecast, “More things will have to be done,” Goossen said.

 

Lawmakers – many of whom were just elected Tuesday – will then face some tough decisions. State Sen. Dwayne Umbarger, a Thayer Republican who chairs the Ways and Means Committee, predicted the cuts could be painful.

 

“It’s obvious we’ll have to have a complete overhaul of the budget,” he said. “…We’re all going to have to tighten our belts and get through this. And we will get through this. We’ve been through this before.”

 

It’s possible that K-12 education, which makes up nearly

one-third of the budget could take a cut. “At this point, you may not have a choice,” said Sen. David Wysong, a Mission Hills Republican.

 

The last time the state faced serious revenue declines – in the 2001 recession – lawmakers raised taxes. But Sen. Jean Schodorf, a Wichita Republican who chairs the Senate Education Committee, doesn’t think that will happen this time.

 

“With a brand new Legislature I don’t think there is the stamina to raise taxes, so I think you are going to see a lot of cutting,” she said.

 

The stark budget picture also means any new spending proposals – costly health reforms, any increases to school funding, business incentives and tax cuts – will face long odds.

 

“Whatever you add on to this makes the negative numbers more negative,” Goossen said.