Yesterday, the Consensus Revenue Estimating Group released its April estimates for state general funds through FY 2021. The numbers are sobering in their decline. Estimators believe revenue will decline by nearly $1.25 BILLION over the next 14 months. The State will lose almost $90 million per month over this stretch. The effects will not be immediate, as projections have the State ending this fiscal year (June 30) with a smidge over $200 million. The cliff comes in FY2021 when the State loses $650 million and ends with a budget hole of eight percent. The big losers are obvious to point out, but income tax will be down almost $300 million in FY21. Sales tax also takes a big hit, projecting $110 million in the red. You can review the entire report here: http://www.kslegresearch.org/KLRD-web/Publications/CRE/2020_CRE_ShortMemo_4-20-2020.pdf
Gov. Kelly has already stated she plans to freeze hiring and eliminate discretionary spending. Legislative leaders will convene by video conference this week to discuss options to move forward. Leadership is calling for a plan to reopen the state economy. Gov. Kelly is working on one, but she stated there needs to be more testing to avoid possible re-closure should the virus spike again.
State government understood that closing major parts of the economy, delaying income tax payments until September and footing the bill to fight COVID-19 would have an economic impact. The issues now are when to reopen and what to cut once we get back.