July 20, 2024

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KS Revenues Beat Expectations; State Budget Still Broken

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The good news: Kansas revenues continued to beat projections in February. The bad news: Kansas budget is still out of whack, and barring a fleet of cash trucks miraculously dumping their cargo at the foot of the Kansas Legislature, it won’t be enough to fill the holes lawmakers and the Kansas Supreme Court dug last year.

The good news: Kansas revenues continued to beat projections in February. The bad news: Kansas budget is still out of whack.

Total tax receipts, after last month’s accounting, are $275.4 million more than expected so far this year, and a whopping $612.7 million more than the state had collected by the end of February last year.

Last  year, lawmakers passed, retroactively, the largest tax increase in state history last year. Simultaneously, they passed the largest state budget in history, while sweeping money from the Kansas Department of Transportation and delaying payments to the public employee pension programs. Despite those measures, that budget will be busted in 2020 unless lawmakers raise taxes again or cut spending.

And cutting spending is looking about as likely as a woman giving birth to sextuplets while being struck by lighting. Not only are lawmakers looking for ways to increase funding for critical state services like corrections, foster care services, and mental health, but they’re also working under a court-imposed deadline to adopt a new school financing formula. Many suspect satisfying the Kansas Supreme Court will require infusing public schools with another $600 million in new school funding.

That will be tough to come by, even with help from higher than expected income tax receipts and growth in sales tax revenues. Individual income tax collections are tracking $268.9 million higher than expected and sales tax revenues beat projections by $6.3 million last month.

While the spike in income taxes may be due, in part, to the tax hikes, corporate receipts may be doing just the opposite in the face of the new tax rates. Corporate receipts fell $9.7 million below projections, though they remain higher than they were last year at this time.

 

“There is a growing sense of optimism reflected in tax receipts, but we have to be patient for April receipts to accurately identify economic growth,” Revenue Secretary Sam Williams said. “Hopefully this is a sign that businesses are making investments and Kansans are buying more goods and services.”

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