Archive for Thursday, November 3, 2005

Fiscal forecast changing because tax revenues up

November 3, 2005


— With the state collecting more taxes than expected, officials are preparing to revise the fiscal forecast that legislators and Gov. Kathleen Sebelius will use in budgeting.

University economists and legislative researchers plan to meet at 1:30 p.m. today with Department of Revenue officials and members of Sebelius' budget staff. They'll emerge with new projections for state revenue collections through June 2007.

Four months' worth of good budget news have preceded the meeting. According to the Department of Revenue, the state collected nearly $1.6 billion from July 1, when the 2006 fiscal year began, through the end of October, which is nearly $99 million more than forecasters had anticipated.

Also, tax revenues during those four months were running 10 percent ahead of collections for the same period last year.

The new forecast is expected to make next year's job of fashioning a fiscal 2007 budget easier, though lawmakers still will face pressing financial issues.

"I think it's going to be very positive," Senate Ways and Means Committee Chairman Dwayne Umbarger, R-Thayer, said Wednesday. "I am very optimistic that we're going to get a good report."

In June, the estimating group predicted the state would collect $4.83 billion in tax revenues in fiscal 2006, with the total growing about 3.4 percent over fiscal 2005.

Starting in July, the state has collected about $46 million more than anticipated in income tax revenues, with much of the $697 million coming from the taxes withheld from workers' paychecks. Those revenues also are 12 percent greater than the amount collected during the same four months last year.

And corporate income tax collections, at $90 million, are nearly $29 million ahead of expectations - and nearly 40 percent higher than the July-through-October period in 2004, the Department of Revenue said.

"It means things are improving in Kansas economically," said Budget Director Duane Goossen. "It's pretty simple. You get more collections when more people are working and making money and corporations are profitable."

Alan Conroy, director of the Kansas Legislative Research Department, said some Kansans are likely to ask whether the state's economy is "on the edge of a bubble that's ready to burst again."

But he added: "Individual job numbers look great. Income taxes look great. There are still a lot of positive signs."

Still, more optimistic revenue projects don't necessarily translate into easy budget discussions next year for Sebelius and legislators.

In previous years, she and legislators have obligated the state to spending additional dollars to shore up the pension fund for teachers and government employees and to keep commitments to highway improvements first made in 1999. The bills come due next year.

Legislators also increased spending this year on public schools by $290 million, or more than 10 percent, without identifying new revenues to support the extra spending. A lawsuit filed by parents and administrators in Dodge City and Salina also could force additional education funding.

"At the end of the day, we're going to have another tight budget," Umbarger said.


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