KTKA

Topeka — State officials said Tuesday that more budget cuts may be on the horizon when the Legislature starts its 2010 session in January.

“Our financial situation is still very challenging,” said Gov. Mark Parkinson’s budget director, Duane Goossen.

On Monday, Parkinson ordered $259 million in cuts and transfers to balance the current fiscal year’s budget. It represented the fifth round of budget cuts this year.

But lawmakers will face more shortfalls when putting together a budget for the next fiscal year, which starts July 1.

That is because the state has yet to start recovering economically; federal stimulus funding, which has been used to prop up the budget, will decline; and caseloads for human services are increasing.

Goossen said the drop-off in state tax revenues during the past two years constitutes the worst fiscal period in the state since the Great Depression.

State Rep. Kasha Kelley, R-Arkansas City, asked Goossen about “out of the box” strategies that agencies were implementing to cope with the shortfalls.

Goossen said state agencies have been coming up with ways to manage cuts, but he added, “We’re beyond looking for efficiencies. We are cutting things that are painful to cut.”

Kansas’ problems are similar to nearly all states across the nation, said Mike McCabe, director of the Midwestern office of the Council of State Governments.

McCabe said declines in state revenues this year have been historic.

To cope with this, states have increased taxes, made sweeping cuts, forced layoffs and furloughs and even sold state assets, including state office buildings.

“States really are pulling out all the stops,” McCabe said.

He said economic forecasts show that states won’t get back to 2008 revenue levels until 2013.

Talk of more budget cuts raised the question of whether the Legislature should consider raising more revenue.

State Rep. Kevin Yoder, R-Overland Park, and chairman of the House Appropriations Committee, said Kansans want to see government reduce expenses rather than increase taxes. Plus, he said, a tax increase could hurt job growth.

“The goal is to get out of the recession as quickly as possible,” Yoder said.

But state Rep. Nile Dillmore, D-Wichita, said he believes lawmakers may be leaning toward considering removing some tax exemptions as a way to increase revenue.

“There may be room for debate on what role those exemptions play,” he said.