Archive for Wednesday, March 3, 2010

State revenues again don’t live up to expectations

March 3, 2010

The news just keeps getting worse when it comes to the state’s budget situation. Last Friday we learned tax revenues for February were 27 percent lower than expected — about $71 million. This marks the third month in a row of lower than expected receipts. This news really throws the budget process under way at the Statehouse into chaos.

The current state budget — Fiscal Year 2010 that ends June 30 — is now $105 million short of what is needed to cover all budgeted expenses with just four months remaining in the fiscal year. Complicating things even further is the fact 2011 is already projecting a $416 million revenue shortfall. All total between the current year and 2011 the state is currently looking at a $ 521 million revenue shortfall, which is approximately 9 percent of the State General Fund budget.

I remain very concerned about the trend of our state tax revenues. We have already made cuts to the 2010 budget five times. And it appears our economy is not rebounding.

Legislature Approves Statewide Smoking Ban

The House voted to agree with the Senate’s smoking ban proposal, 68-54. Senate Substitute for House Bill 2221 bans smoking in private businesses, restaurants, bars, 80 percent of hotel rooms, in-home daycares, taxis and limos.

Smoking will still be permitted in tobacco shops, certain private clubs, designated areas of adult care buildings and the gambling floors of state-owned casinos. The bill also overrides local smoking bans already in place in 39 cities and counties in Kansas but allows communities to approve stricter bans.

The motion to concur with the Senate’s bill did not allow House members to make changes to the bill. We had to accept it as is or send it back to the conference committee. I still have concerns with the exemption of state-owned casinos and the potential for exposing the state to lawsuits because of that exception. There are some serious flaws in the bill that passed so the Legislature will need to go back and fix it.

House Bill Addresses Unemployment Compensation Fund Crisis

The House passed a measure aimed at helping Kansas businesses handle recent unexpected increases in the rates for the state unemployment compensation fund.

In mid-December, 69,500 Kansas businesses received notices that their 2010 unemployment tax rates were being increased to cover the fund’s predicted shortfall. In some cases, it meant an increase of tens of thousands of unexpected taxes for businesses.

House Bill 2676 as passed by the House would cap the rates for most businesses (in rate groups 1 through 32) at the original 2010 tax rate for calendar years 2010 and 2011. Businesses that experience a higher rate of unemployment (in rate groups 33 through 51) would be capped at 5.4 percent. Companies also would have a 90-day grace period to pay what they owe before being charged a penalty or interest.

It is now before the Senate for its consideration.

First elected to the Kansas Legislature in 2001, Rep. Lee Tafanelli represents the 47th House District which includes all of Jefferson County, the city of Effingham, and Benton and Center Townships in Atchison County.

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