Archive for Wednesday, April 7, 2004

State tax collections signal economic stability

New numbers encourage lawmakers

April 7, 2004

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— Key legislators said Tuesday they were heartened by a new report on state revenue collections, pointing to indications that the Kansas economy is stable.

In the first nine months of the current fiscal year, which began July 1, 2003, general revenue totaled $3.18 billion -- just $5.7 million less than the state's economic forecasters had predicted last November, according to the report issued Monday.

Legislators use the forecasts as they write and vote on budgets. A new forecast is to be issued April 20, a week before legislators return from a long recess and decide whether revisions are needed in the $10.2 billion budget they have already approved and sent to Gov. Kathleen Sebelius.

Exceeding expectations

House Speaker Doug Mays, R-Topeka, said he was especially encouraged that corporate income taxes in the first nine months of the current fiscal year exceeded expectations by $18.8 million. The total, $86.6 million, was more than twice the amount collected during the same nine-month period a year earlier.

Senate Ways and Means Committee Chairman Steve Morris noted that the state collected $321.6 million in general revenue in March, compared with the official March forecast of $315.9 million.

Morris, R-Hugoton, said rising commodity prices have helped agriculture, and he believed Kansans were feeling better about the economy.

"A lot of the recovery is psychological," Morris said. "If people say there's a recovery going on, it feeds on itself."

Forecast amounts

Relying on the November forecast, budget writers assumed the state would collect $4.47 billion in general revenues during the next fiscal year. Federal dollars, bonds, tuition and earmarked fees provide the remaining funds for state government operations.

In past years, a gloomy spring forecast has left legislators scrambling to rewrite their spending recommendations.

In 2002, as legislators were debating a 2003 budget, the forecasters became more pessimistic and lowered their revenue estimate by nearly $125 million. In 2001, forecasters cut the estimate underpinning the 2002 budget by $111 million.

Optimistic forecast

Morris said the latest revenue figures suggest to him that this spring's forecast will stay with the November figures or be more optimistic.

"My guess would be there would be some growth" in the economy over the next year, Morris said.

House Appropriations Committee Chairman Melvin Neufeld, R-Ingalls, also saw corporate income tax collections as a positive sign.

And while Senate Minority Leader Anthony Hensley, D-Topeka, said it was hard to predict how estimators would adjust the financial forecast, "I'm certainly hopeful."









A comparison of estimates to the state's actual general revenue collections from July 1, 2003, through March 31, with figures in millions:
Revenue source Estimate Actual Difference
Individual income tax $1,269.0 $1,258.6 ($10.4)
Retail sales tax $1,222.0 $1,210.8 ($11.2)
Compensating use tax* $165.0 $162.8 ($2.2)
Tobacco excise tax $100.7 $92.7 ($8.0)
Insurance premium tax $69.9 $78.0 $8.1
Corporate income tax $67.8 $86.6 $18.8
Mineral severance tax $66.1 $62.4 ($3.7)
Alcohol excise tax $50.0 $48.9 ($1.1)
Estate tax $34.5 $37.8 $3.3
Corporate franchise tax+ $20.7 $22.1 $1.4
Interest earnings $9.2 $10.3 $1.1
Other revenues $110.6 $108.8 ($1.8)
Total $3,185.5 $3,179.8 ($5.7)
*The compensating use tax is paid by Kansans instead of the sales tax on items purchased through catalogs, over the Internet, or out-of-state.+The corporate franchise tax is considered the state's fee for the privilege of doing business in Kansas.-- Source: Legislative Research Department

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