Kansas collects $7.6M more in taxes than expected in July

By JOHN HANNA Markets Associated Press

Kansas collected $7.6 million more in taxes than anticipated in July, which was the first month under an income tax increase enacted by legislators by overriding Republican Gov. Sam Brownback's veto.

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Brownback's budget director and revenue secretary said it's too early to tell whether the higher taxes imposed by lawmakers will raise the expected $1.2 billion over the next two years to help keep the budget balanced. Brownback aides have argued that even the debate over raising taxes dampened economic activity.

"The new tax law brings so many ramifications that it's difficult to separate economic trends from the tax increase," Revenue Secretary Sam Williams said in a statement.

The Department of Revenue reported that the state collected $453.5 million in taxes last month, or 1.7 percent more than the official estimate of almost $446 million, a figure adjusted to account for the tax changes. Lawmakers raised income tax rates and ended an exemption for more than 330,000 farmers and business owners, rolling back past tax cuts championed by Brownback to close projected budget shortfalls.

The state also ended its 2017 fiscal year on June 30 with tax collections surpassing $5.8 billion, which exceeded expectations by about 1.3 percent. The entire $72 million surplus was recorded in June, after lawmakers increased taxes.

But the state also saw slightly lower non-farm employment in April, May and June than in the same months in 2016, even as its unemployment rate remained low, at 3.7 percent.

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Kansas officials also acknowledged that it's hard to predict how revenue from the tax increase will flow into the state's coffers, month to month. For example, Williams is publicly urging business owners to pay their additional taxes in installments, but they face no penalties if they wait until April 2018.

Budget Director Shawn Sullivan tweeted: "What did we learn from July individual income tax collections? Not a lot."

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This story has been corrected to reflect that the percentage surplus in tax collections during the state's 2017 fiscal year was 1.3 percent, not 1 percent.

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