Kansas collected $47 million less than anticipated this month, signaling that Gov. Sam Brownback and legislators may have to be more aggressive with spending cuts or other measures to balance the budget.
But the Department of Revenue said Friday that a key factor was greater-than-expected income tax refunds during the month, with the federal government processing returns more quickly than it did last year. Department spokeswoman Jeannine Koranda said the state waits on the federal government to process each set of returns first, so faster federal processing means more state refunds earlier in the tax season — and the possibility that refunds could "even out" later.
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The Republican-dominated Legislature is working on proposals to eliminate a projected $279 million shortfall in the current budget, which ends June 30. Brownback's budget director has said if lawmakers don't pass a budget-balancing bill by Feb. 13, the state may not be able to pay its bills on time.
House Speaker Ray Merrick, a Stilwell Republican, said his chamber's Appropriations Committee would build unspecified "additional contingencies" into its budget plan. Brownback has proposed selected cuts, but his plan relies heavily on diverting funds from highway projects and special funds into the state's main bank account, where the projected deficit occurs.
Budget gaps in this and the next fiscal year arose after lawmakers aggressively cut personal income taxes in 2012 and 2013 at Brownback's urging to stimulate the economy. The state dropped its top rate by 29 percent and exempted the owners of 191,000 businesses altogether.
The current projected shortfall is pegged to revenue estimates that were made in November, showing the state collecting $560 million in taxes in January. Kansas actually took in $513 million, or 8.4 percent less. Since the current fiscal year began, the state has collected $59 million less in taxes than the $3.3 billion anticipated, a revenue shortfall of 1.8 percent.
"We are glad that Kansas taxpayers are getting their refund checks earlier than last year," Revenue Secretary Nick Jordan said. "Unfortunately, that negatively affects our tax receipts for this month."
Brownback's office referred all questions to the Revenue Department.
The state also faces a projected $436 million budget shortfall for the next fiscal year against projected spending of about $6.2 billion. To deal with that gap, Brownback has proposed slowing future income tax cuts and raising tobacco and alcohol taxes.
"How much worse does it have to get before Gov. Brownback admits his failed economic experiment is leading to a meltdown of every public service upon which Kansans depend?" said House Minority Leader Tom Burroughs, a Kansas City Democrat.
The Department of Revenue said it issued income tax refunds totaling $30 million to about 65,000 people in January, compared with $8 million in refunds to about 13,000 people in January 2014.
"In all likelihood, these are refunds that were paid out last year in February," Koranda said.
But state Sen. Laura Kelly, of Topeka, the ranking Democrat on the Senate Ways and Means Committee, said the state's "self-inflicted" fiscal problems stem from the sweeping tax cuts.
"It's going to make solving the budget that much harder," she said of January's shortfall.
Kansas Department of Revenue: http://www.ksrevenue.org/
Kansas Legislature: http://www.kslegislature.org
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