Kansas collected $165 million more than expected in state revenues in January, but officials warn federal tax reform influenced the bump in state receipts.
“The bottom line is, we need to temper our expectations for the remaining months in the fiscal year,” Revenue Secretary Sam Williams said.
According to a press release, changes in tax law incentivized some individuals to make 2017 payments before the end of 2017 in order to take advantage of a state and local tax deduction that expired at the end of the year. Kansas collected $168.6 million more than expected in individual income tax in January, but corporate tax receipts were lower than anticipated. The release theorizes the dip in corporate tax receipts may be a sign corporations are pushing profits out to the 2018 tax year when they’ll benefit from lowered federal tax rates.
In total, the state collected $450.6 million in individual tax collections and $11.9 million in corporate tax receipts last month. Since July, sales tax revenues have averaged a 3 percent increase over the previous year, for a total of about $40.4 million more in revenue. Officials anticipate bringing in $3.94 billion this fiscal year, and right now, the state has received $248.6 more than projected.
Lawmakers may be eyeing the positive revenues as a way to ease budgetary concerns. The two-year budget they adopted last year will be underwater the following year without tax hikes or spending cuts. In the meantime, they face a Supreme Court-imposed deadline to adopt a school funding formula that will likely require more funding for public schools. Revenue officials warned expectations should be tempered.
“While the report is positive, considering state and federal tax law changes, we cannot assume that the state genuinely will have more revenue by fiscal year end. This is not a windfall,” Williams warned.