Kansas Collected $11M Less in Taxes than Expected this Month

Economic Indicators Associated Press

Kansas collected $11 million less in taxes than expected this month, and top Republican legislators acknowledged Tuesday that they'll be forced to consider larger tax increases than anticipated to balance the state budget.

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The Department of Revenue reported tax collections of about $391 million in March, when officials expected $402 million, a shortfall of 2.8 percent. Since the current fiscal year began in July 2014, the state has collected almost $4 billion in taxes — still $48 million, or 1.2 percent, short of expectations.

Republican Gov. Sam Brownback and the GOP-controlled Legislature must close a budget shortfall projected at nearly $600 million for the fiscal year that begins July 1. Senators and House members are negotiating over a $15.5 billion spending plan and anticipated having to raise about $140 million in new revenues.

"It means I have to adjust for $11 million," said Senate Ways and Means Committee Chairman Ty Masterson, an Andover Republican.

The tax collections are pegged to a financial forecast made in November. State officials and university economists plan to meet April 20 to issue a new forecast to guide lawmakers in making their final budget and tax decisions in late April and early May.

"It makes you wonder if there isn't going to be a revision downward to some small extent," said House Taxation Committee Chairman Marvin Kleeb, an Overland Park Republican. "It means we're going to have to take a look at a revenue piece of it and see if we have to add a little bit more."

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The budget shortfall arose after Brownback pushed lawmakers to cut personal income taxes in 2012 and 2013, to stimulate the economy. The state cut its top rate 29 percent and exempted 281,000 business owners and 53,000 farmers altogether.

But the Department of Revenue was quick to note Tuesday that while individual income tax revenues are lower than during the previous fiscal year, they're still ahead of expectations.

During the past nine months, the state collected $1.56 billion in personal income taxes, nearly $13 million, or 0.8 percent more than anticipated. Revenue Secretary Nick Jordan said the numbers are "driven in part by strong employment growth."

But Democrats who've criticized Brownback's personal income tax cuts as reckless were unimpressed because of the overall shortfall in tax collections.

"The impact on the bottom line is the same," said Sen. Laura Kelly, of Topeka, the ranking Democrat on the Senate Ways and Means Committee. "This is just one more indication that we need to restore balance and reasonableness in our state tax structure."

Retail sales tax collections, $1.6 billion during the past nine months, were about $19 million, or 1.2 percent, short of expectations, which the Department of Revenue blames on soft retail sales nationally.

Corporate income tax collections for the past nine months, at $259 million, are nearly $26 million less than anticipated, or 9 percent. Department of Revenue spokeswoman Jeannine Koranda said the agency doesn't have a good explanation for why they're off.

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Online:

Kansas Department of Revenue: http://www.ksrevenue.org .

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

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .