Tax revenues signal growing economy

? State officials Monday forecast solid tax revenue growth, signaling a strengthening economy and perhaps an easier fix to school finance.

“These numbers would reflect a good economic climate in Kansas,” said Duane Goossen, budget director for Gov. Kathleen Sebelius.

The Consensus Revenue Estimating Group, composed of state budget officials and university economists, met to revise its revenue estimates for the current fiscal year, which ends June 30, and the next fiscal year. The Legislature uses the findings to write state budgets.

The estimate shows that state coffers are expected to increase $289.4 million more than the last revenue estimate, which was made in November.

The current fiscal year revenues will total $5.3 billion, a 9.7 percent increase from the last fiscal year, which was a 7.1 percent increase from the year before that.

“It reflects continued growth and strength in the Kansas economy,” said Alan Conroy, director of the Kansas Legislative Research Department. “This is the largest single increase, in terms of dollars, that the consensus group has added at the April meeting.”

Lawmakers will reconvene the 2006 legislative session April 26, as they face a court order to increase school funding and more equitably distribute those funds.

So far, the most-discussed school funding increases range from a four-year, $490 million plan that failed on a tie vote in the Senate to a three-year, $633 million proposal approved by the House.

Senate President Steve Morris, R-Hugoton, said the new revenue estimates were “very good news.”

He said the Legislature could afford a three-year increase for schools of $450 million to $500 million within existing revenue sources.

“It should make it more palatable to a number of legislators that there will be money to pay for the third year,” Morris said.

The state’s growth in tax revenue is tracking national trends for state governments, which have been on the rebound since the recession that followed the Sept. 11, 2001, terrorist attacks.

In Kansas, revenue from the state corporate income tax increased 60percent during the last fiscal year and is expected to increase 46 percent this year. Personal state income tax revenue increased 8.6 percent last year and will grow 12.7 percent this year. Sales tax growth was more modest, increasing 2.2 percent last year and 4.7 percent this year.

Total tax receipts are expected to grow 2.3 percent in the next fiscal year. That growth is reduced by earlier approved commitments to divert funds to pay for highway projects and plow tax revenue back into bioscience businesses.