Once-Troubled Kansas Revenue Numbers End Year With Sustained Rebound

Jul 2, 2018
Originally published on July 3, 2018 12:27 pm

Kansas tax collections in June beat estimates — projections that already factored in tax hikes — by $144 million. That capped off a fiscal year where the state topped projections every month, which is a sharp departure from some recent years.

Lawmakers use the projections when they craft the budget, so the boost in revenue means the state’s bank account ends the fiscal year with $318 million more than state officials anticipated.

“With tax receipts coming in above expectations every month during the last year, there’s optimism that this trend will continue,” Kansas Revenue Secretary Sam Williams said in a statement after the latest numbers were released on Monday.

Over the fiscal year, individual and corporate income taxes were $290 million above estimates. Sales taxes came in $12 million higher than expected.

Kansas Department of Revenue Economist Michael Austin said the Kansas economy is following some national trends, and that’s helping the state’s tax collections. Austin said federal tax reform and continued growth out of the 2008 recession could be playing parts.

“People’s incomes are definitely looking better than they had been last year,” Austin said. “Kansas is a part of that.”

In the coming days, legislative staff will crunch the new revenue numbers to determine exactly how much money the state will have left as an ending balance.

The latest numbers are a stark contrast to where the state was just a few years ago.

Lawmakers cut taxes in 2012. A couple years after the major policy overhaul, the state’s monthly tax collections were in a rocky situation. By the middle of 2015, Kansas was mostly missing the monthly forecasts.

That led to lean budgets and some mid-year cuts to state services. Then-Gov. Sam Brownback cut higher education $17 million in March 2016 after a bad monthly revenue report.

There was a change in November 2016. That’s when the group that creates the revenue forecast seemed to finally get a better handle on the state’s financial picture. Since then, the state has consistently met monthly targets and economic growth seems to have further brightened the state’s finances.

Lawmakers then reversed many of the 2012 tax cuts in 2017. Revenue forecast updates since then have taken into account the expected growth from the tax hike.

On Monday, politicians began weighing in on how the state should respond to the larger-than-expected tax collections shortly after the new revenue report came out.

“The additional revenue gives us a chance to restore education cuts, expand Medicaid and work towards lower food sales taxes in 2019,” Democratic state Rep. Brandon Whipple said on Twitter.

The financial news comes as lawmakers consider how to respond to the latest court ruling that said the state isn’t spending enough on schools.

Kansas Secretary of State Kris Kobach, a Republican running for governor, said lawmakers should not look at spending the revenue.

“Those dollars belong in the pockets of the people of Kansas,” Kobach said. “As governor, I will move immediately to reduce taxes.”

Stephen Koranda is Statehouse reporter for Kansas Public Radio, a partner in the Kansas News Service. Follow him on Twitter @kprkoranda.

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