State fiscal analysts increased their revenue forecasts by about $377 million for 2025 and 2026, although the state continues running a budget deficit that will leave its ending balance in the red by 2029.
While the new revenue forecasts paint a hopeful picture for the state, there were warnings of future uncertainty with the state spending $930 million more than revenues in fiscal 2025, $555 more than revenues in 2026 and $831 million in 2027.
The state budget director warned that the state budget, drawn up by the Legislature for the first time this year, was “structurally imbalanced.”
The state is expected to see its ending balance plummet from $3.2 billion in 2024 to a $730 million deficit in 2029.
The new revenue estimates do not account for the uncertainty in the national economy, which has been rattled by trade policy and questions about whether it will lead to a period of high inflation, slow growth and possibly unemployment.
The budget profile shows the state’s ending balance running $730.5 million in the red by fiscal year 2029, although it would still have a rainy-day fund of $1.9 billion.
Still unknown is the full impact of the tax cuts approved last year, which were estimated to cost $471.6 million in 2025, $378.9 million in 2026 and $380.5 million in 2025.
The tax cuts play out as returns come in so the state may not fully understand their impact until maybe the end of May, officials said.
Officials also said it was unlikely that the new income tax cuts approved by the Legislature this year would be triggered by new revenues through 2026.
Budget Director Adam Proffitt shied away from using the words “good” or “bad” in describing the new revenue estimates but cautioned about the ongoing deficit between revenues and expenses.
“There are still concerns over the long run with our fiscal situation,” he said. “The ending balance is eroding rather rapidly based on the forecast we provided today.
“Expenditures are far in excess of anticipated revenues over the next couple of years,” Proffitt said. “We are structurally imbalanced. There are no two ways about it.
“It’s something that needs to be addressed,” he said. “It’s something we’ve been looking at for some time.”
Gov. Laura Kelly said no one should mistake seeing the new numbers as positive.
She said they more likely reflect the approach of fiscal hardships similar to what the state grappled with when Sam Brownback was governor.
“Today’s Consensus Revenue Estimates could be seen as positive news. In reality, they underscore the seriousness of the financial predicament ahead,” Kelly said in a statement.
“The bizarre and irresponsible budget gimmicks used by the Republican-led legislature spend more than the state takes in by nearly $800 million per year,” she said.
“Ultimately, this will lead to a historically large budget deficit, rivaling the worst of the Brownback years,” she said.
“Kansans need to demand their legislators restore fiscal sanity and fairness when they return in January,” she said.
House Speaker Dan Hawkins praised the budget approved by the Legislature, pointing to the fact that it was smaller than the one introduced by the governor.
“Be wary of those who want to make political hay by invoking the budget boogeyman and screaming that the sky is falling,” Hawkins said in a statement.
“These positive consensus revenue estimates reaffirm we’re headed down a smart and sustainable path as we continue to monitor all fiscal data as it’s available.”
The revenue estimates were released the day after Federal Reserve Chair Jerome Powell warned about the effect that President Donald Trump’s tariffs would have on the economy.
“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said Wednesday at an event in Chicago. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
He added that surveys of households and businesses report a sharp decline in sentiment and elevated uncertainty about the outlook, largely reflecting trade policy concerns.
“Outside forecasts for the full year are coming down and, for the most part, point to continued slowing but still positive growth,” he said in prepared remarks.
“We are closely tracking incoming data as households and businesses continue to digest these developments,” he said.
Revenue forecasters said Powell’s comments were not reflected in the new financial estimates because they are focused on the future and analysts don’t have access to the same data available to the Federal Reserve.
“The biggest issue there is we haven’t seen what changes any of these possible things would do,” said Shirley Morrow, director of Legislative Research.
“So, when we make our predictions we have to go off what we know is going on currently,” Morrow said.
“The fact that some of these haven’t happened and that they are predictions in the future, we didn’t make our expectations from those possibilities,” she said.
Proffitt added, “To the extent that the fed chair has data available to the fed and not to us is not part of this forecast.”
