Archive for Friday, July 30, 2004

State revenue exceeds estimates

Legislators hope surge in collections reflects economic recovery

July 30, 2004

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— The state collected $68.3 million more than expected during its 2004 fiscal year, and legislative leaders said Thursday they hoped the good news was a sign that Kansas is experiencing an economic recovery.

Revenues were nearly $4.52 billion during fiscal 2004, which ended June 30, according to a report from the Legislative Research Department. In April, state officials had estimated the final total would be $4.45 billion.

Much of the surge came in May, but revenue collections in June also were $8.7 million more than anticipated, at $466.3 million.

"That's good news," said House Speaker Doug Mays, R-Topeka. "I think it shows we've turned the corner on the economy in Kansas."

But while Mays and other legislative leaders acknowledged that the Kansas and national economies seem to have improved, they remained cautious in assessing their strength and the prospects for continued revenue growth.

"It's too early to tell how much of a positive trend it is," said Senate Ways and Means Committee Chairman Steve Morris, R-Hugoton. "Certainly, it's better than what we've had in recent years. The economy is getting better. How much better is still a question mark."

Officials agreed that Kansas' economy was starting to slump before the Sept. 11, 2001, terrorist attacks, a slump that accelerated afterward, with layoffs in the aviation and telecommunications industries. In fiscal 2002, revenue collections dropped almost 7 percent and only this year surpassed fiscal 2001 levels.

The fiscal 2004 collections were 6.4 percent ahead of fiscal 2003's revenues of $4.25 billion.

Steve Stotts, director of taxation, said much of the growth in revenues -- and unanticipated collections -- could be attributed to more stable financial markets last year. Individual income tax collections, at $1.89 billion, were $58.4 million more than expected.

"People actually had some capital gains rather than capital losses," Stotts said.

Corporate income tax collections also were $16.2 million better than expected, at $141.2 million. House Minority Leader Dennis McKinney, D-Greensburg, said he saw corporate tax collections as a "leading indicator" of whether the economy is improving.

Senate President Dave Kerr said an economic recovery was "what you'd like to read into it."

"The feeling one has at this point is that economy nationally is improving," said Kerr, R-Hutchinson.

However, Stotts said he doubted the state would see 6.4 percent revenue growth again in fiscal 2005. He said growth was likely to be between 4.5 percent and 5 percent.

"I think it's obvious that the economy is getting better, but it's not raging," Stotts said.

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