Kansas is kicking off a new fiscal year Wednesday. The state wrapped up last fiscal year with tax collections coming in $22 million below estimates in June. State lawmakers didn't plan on a big savings account in this new fiscal year, and that makes the monthly revenue numbers critical.
Kansas lawmakers cut taxes several years ago. This year, they raised taxes and made cuts to balance the budget, but those changes still leave a state savings account estimated at under $100 million at the end of our new fiscal year.
“Essentially now, the state’s kind of living paycheck-to-paycheck," says Annie McKay, who studies the state’s finances for the Kansas Center for Economic Growth.
McKay says the state savings account is less than 2 percent of the overall budget. That means it’s vulnerable to being wiped out if tax collections come up short for several months.
“The problem now is that we don’t have the cushion we once did, so every million that we miss is a big deal to the state’s budget,” says McKay. "$80 million can be wiped out, as we’ve seen, in just two or three months of bad collections,” McKay says.
Kansas Secretary of Revenue Nick Jordan points out that while June missed the mark, tax collections last fiscal year were higher than 2014.
If tax collections fall too far below estimates in the coming months, Gov. Sam Brownback could be required to cut state spending. If tax collections come in higher than expected, the state’s savings account will grow.
Kansas tax collections were $22 million below estimates for the month of June, the last month of the current fiscal year. That comes after economists lowered the state’s revenue projections in April.
Money is expected to be tight for the state in this coming fiscal year. Kansas legislators raised taxes and cut spending, but the state’s savings account is estimated to be under $100 million, or less than 1.5 percent of the budget.
Annie McKay, who studies the state’s finances with the Kansas Center for Economic Growth, says the small savings account makes monthly tax collections critical.
“We’ve made some maneuvers here to give us a little bit more wiggle room, but we certainly don’t have the cushion that we once did. $80 million can be wiped out, as we’ve seen, in just two or three months of bad collections,” McKay says.
If tax collections fall too far below estimates in the coming months, Gov. Sam Brownback could be required to cut state spending. If tax collections come in higher than expected, the state’s savings account will grow.
