Republican Gov. Sam Brownback said he saw signs of economic growth Friday after a report showed that Kansas collected $22 million more in taxes than anticipated this month.
Even with the unanticipated windfall for the month reported by the state Department of Revenue, the state's tax collections for the past eight months are running slightly behind expectations. Also, it doesn't solve the state's budget problems, with a shortfall projected at nearly $600 million for the fiscal year beginning in July before the latest report.
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But this month's good news came after tax collections fell short of expectations in December and January — complicating the state's budget problems — and in eight of the previous 10 months. Early in February, some lawmakers had wondered whether collections would remain disappointing.
The department said the state collected almost $310 million in taxes in February, when it anticipated taking in $287 million, a surplus of 7.7 percent.
Brownback and Revenue Secretary Nick Jordan said they were encouraged by personal income tax collections for the month. They were $92 million — $27 million, or 42 percent greater than expectations.
Jordan noted that Kansas' unemployment rate, 4.2 percent in December, is approaching historically low levels, and the state keeps gaining jobs. Jordan said it's reflected in higher amounts of taxes withheld collectively from workers' pay.
Brownback said in a statement that the outcome is "the result of a growing Kansas workforce."
The state's budget problems arose after Brownback successfully pushed legislators to slash personal income taxes in 2012 and 2013, arguing it would stimulate the economy. The state dropped its top rate 29 percent and exempted 281,000 business owners and 53,000 farmers from income taxes altogether.
The decline in individual income tax revenues after those cuts was sharper than expected, leading critics to suggest they were reckless.
But Brownback's administration argues that national trends — a recent slump in consumer spending and uncertainty about federal tax policies in 2012 and 2013 causing people to use tax shelters — are to blame.
Since the current fiscal year began in July, through February, the state collected $3.55 billion in taxes, when it expected to take in $3.6 billion. The difference is $37 million, about 1 percent.
"While the revenue numbers for February are positive, a single month increase is not indicative of a recovery," House Minority Leader Tom Burroughs, a Kansas City Democrat, said in a statement. "Difficult decisions are going to need to be made to place our state on a sustainable path forward."
Individual income tax collections for the past eight months slightly exceeded expectations, at $1.4 billion, about $4 million, or 0.3 percent more than anticipated, though they're still short of collections during the previous fiscal year.
When individual income taxes for January alone fell short of expectations, the Department of Revenue said the federal government was processing refunds faster than it did in January 2014, making the state refunds that follow go out more quickly.
The state paid $22 million more in income tax refunds in January than in January 2014, and the department said Friday that the processing of refunds has since "evened out."
Kansas Department of Revenue: http://www.ksrevenue.org
Kansas Legislature: http://www.kslegislature.org
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