- Associated Press - Thursday, May 1, 2014

TOPEKA, Kan. (AP) - Kansas legislators negotiating over the next state budget whittled away at their differences Wednesday night after majority Republicans cast aside a bleak revenue report that threatened to undermine a rosy forecast lawmakers were using to justify some spending.

Three senators and three House members planned to resume their budget talks Thursday, hoping to settle the remaining issues quickly. They hadn’t resolved spending for the state prison system or whether state workers will get a pay raise.

Their work was overshadowed by a Wednesday afternoon report from the state Department of Revenue that tax collections for the month totaled $92 million less than expected. Officials blamed changes in the federal tax code on capital gains and other income.

Gov. Sam Brownback and other Republican leaders immediately blamed Democratic President Barack Obama, the Kansas GOP’s usual suspect following bad fiscal news. Democrats assigned responsibility to their favorite target: the massive personal income tax cuts enacted at Brownback’s urging in 2012 to stimulate the economy.

The report undercut a forecast made by analysts two weeks ago, boosting revenue projections for the next 18 months by $177 million. But Republicans were brushing aside the doubts raised by the new figures, anticipating that the state’s cash reserves will act as a cushion and any fallout can be dealt with next year, including spending adjustments.

“The sky is not falling,” said Rep. Marvin Kleeb, an Overland Park Republican and one of the negotiators.

Brownback and Revenue Secretary Nick Jordan blamed Obama’s fiscal policies because other states are experiencing similar drops in revenue. They said many taxpayers claimed capital gains during the 2012 tax year to avoid paying higher federal tax rates on them in 2013.

But House Republican budget negotiators said they believe the state - like others - will rebound.

House Speaker Ray Merrick, a Stilwell Republican, said the “unpredictability” of state revenues demonstrated why legislators should continue to restrain spending to prevent cuts to state services.

Democrats said the budget situation was complicated by the income tax cuts championed by Brownback, which have caused state revenues to drop overall during the current fiscal year.

Senate Minority Leader Anthony Hensley, a Topeka Democrat, said the state is dealing with a “self-inflicted budget crisis.”

Legislative staff said they were aware that other states were seeing the impact of the changes in the federal code, which could last for a couple of budget cycles, but didn’t know the impact on Kansas at the time of the revised forecast.

Both chambers envision spending about $14.6 billion in 2015, including more than $6 billion in state general revenues, including a request by Brownback to increase spending by $5 million in state revenues for health care services for more than 200 people currently on state waiting lists.

Those individuals receive assistance through the state’s Medicaid program, known as KanCare, managed by three private insurance companies.

The increases would reduce waiting lists for those with developmental, intellectual and physical disabilities. The administration has projected $30 million in savings in KanCare spending as the state curbs growth in health care costs.

The Republican governor has already signed legislation increasing aid to poor school districts by $129 million during the 2014-15 school year to satisfy a Kansas Supreme Court decision in March in an education funding lawsuit filed by parents and school districts in 2010. A lower court plans to have a June 11 hearing to determine whether the measure complies with the high court’s ruling.

The House and Senate budget negotiators are still considering Brownback’s proposal to add 28 new officers at the state’s prison for women in Topeka, following a 2012 finding by the U.S. Justice Department that staffing there was inadequate.

The House Appropriations Committee rejected Brownback’s request to give state civil service employees a 1.5 percent pay increase, but negotiators said the issue still is part of the budget talks.

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AP Political Writer John Hanna also contributed to this report.

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Online:

Kansas Legislature: http://www.kslegislature.org

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