Topeka Kansas collected $22 million less in taxes than expected this month, which will complicate efforts by Gov.-elect Sam Brownback and legislators to keep the state’s budget balanced.
The state Department of Revenue reported Thursday that tax collections came to $489 million during December, or about 4 percent lower than the $511 million projected for the month. The most significant shortfall was in corporate income tax collections, which were about half of what the state anticipated.
Legislative researchers already had projected that the gap between anticipated revenues and existing spending commitments was approaching $500 million for the fiscal year beginning July 1. They’re expected to update their figure next week, and it’s likely to grow well beyond $500 million, with revenue shortfalls in this fiscal year expected to ripple into the next one.
“This is still a very fragile budget,” said state Senate Majority Leader Jay Emler, a Lindsborg Republican who just finished two years as chairman of the budget-writing Ways and Means Committee. “It is not good news, but it also is not terribly unexpected.”
From the start of the current fiscal year on July 1 through November, tax collections had almost matched revenue projections, leading outgoing Democratic Gov. Mark Parkinson to declare that the state’s finances were stable. But with December’s shortfall, tax collections for the entire fiscal year, at $2.6 billion, are $23 million short of expectations.
Brownback, a Republican, takes office Jan. 10, the same day the GOP-dominated Legislature opens its annual session. There’s been no talk of increasing taxes, partly because Brownback has promised to avoid it, but also because Parkinson persuaded lawmakers to increase the state sales tax earlier this year.
“The drop in revenues is a reminder that our state’s economy is still very volatile,” said Brownback spokeswoman Sherriene Jones-Sontag. “Expanding businesses and getting more Kansans working again will strengthen our state’s economy and stabilize revenues so we can fund our state’s core responsibilities.”
The state is facing a projected budget shortfall for the next fiscal year largely because it’s been using federal economic stimulus funds to prop up aid to public schools and social service programs, and those dollars are expected to disappear.
The state’s largest source of ongoing revenue is individual income taxes, and there the numbers have been good, with collections running ahead of expectations after December. Sales tax revenues generally are meeting expectations.
But the state had expected to collect $60 million in corporate income taxes in December and took in a little more than $30 million. Officials said Thursday that perhaps companies that had made healthy estimated tax payments in the past few quarters — keeping revenues in line with expectations — adjusted their payments so they wouldn’t pay too much for the year.
“Maybe things are slowing down slightly this quarter, compared to previous quarters,” said Alan Conroy, director of the Legislature’s research staff.