News of windfall comes too late for state to act

Some legislators upset at lost chance to further fund Kansas schools

? The state experienced a windfall in income tax collections in May, but some legislators were frustrated Tuesday because they learned about it too late to provide additional funds to public schools.

The Department of Revenue released preliminary revenue figures showing tax collections were $62.4 million more than expected from July 1, 2003, when the current fiscal year began, through May 31. Individual income tax collections alone were $61.7 million more than expected.

The department’s preliminary figures showed tax collections had been running slightly behind expectations through April, then surged in May.

The department released its figures to the Legislature’s staff on the first day of June, five days after lawmakers adjourned their session for the year without approving a plan to provide additional money to public schools.

Sen. Dave Jackson, a Topeka Republican, said that had many legislators known income tax collections would exceed expectations, they would have attempted to pass a school finance plan Thursday, the day set aside for a brief adjournment ceremony. No attempt was made.

“We would have made a run at it,” he said. “We would have been able to address the education problems.”

But officials in Gov. Kathleen Sebelius’ administration were more cautious in characterizing the surge in revenues. Budget Director Duane Goossen said it probably was “a one-month spike.” Revenue Secretary Joan Wagnon called it “a bubble.”

But Wagnon acknowledged legislators’ frustrations, saying, “Yeah, they’d have spent it.”

The Department of Revenue’s figures showed the state collected $3.84 billion in general tax revenues from July 1, 2003, through May 31. The state’s official fiscal forecast, issued in April, predicted collections through May would be $3.78 billion.

Typically, the department releases its preliminary figures on the last day of the month or the next day. Its numbers do not include some sources of general revenue, such as interest earnings and insurance premium taxes, which are collected by the Insurance Department.

Within a week, the Legislature’s staff usually releases its own, final report looking at all general revenue sources.

Foreseeable windfall?

Several legislators said the administration should have seen the windfall developing as the Department of Revenue processed individual income tax returns in late April and early May.

Legislators recessed May 8, thinking they had finished their business for the year. However, scheduling an adjournment ceremony for Thursday gave them another chance to deal with school finance.

“That’s a lot of money to show up in May,” said Senate President Dave Kerr, R-Hutchinson. “I believe if this information had been known it might have changed the outcome.”

Wagnon said the windfall was a surprise because a good portion of it — she does not know exactly how much — was due to Kansans increasing the amounts withheld from their paychecks to cover taxes after having paid last year’s tax bills.

As for legislators, Wagnon said, “What they need to understand is that our Ouija board isn’t any better than anybody else’s.”

By early May, legislators had approved $2.77 billion for public schools, an amount keeping state aid at its present $3,863 per pupil. They continued to argue about providing additional dollars, which education officials said was necessary for districts to keep up with rising costs.

On May 8, the Senate approved an $82 million school package borrowing money from the state transportation program.

House members balked, with a coalition of Democrats and moderate Republicans wanting to raise sales and income taxes for a larger plan, arguing that higher taxes were necessary to avoid creating future problems elsewhere in the state budget.

“It seems to me the Senate plan might have looked more enticing to House members had this information been available,” Kerr said.