Archive for Friday, February 26, 2010

Kansas reports tax revenue shortfall for February of $71 million

More cuts may follow

February 26, 2010, 3:35 p.m. Updated February 26, 2010, 11:53 p.m.

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— Kansas Gov. Mark Parkinson backed away Friday from his opposition to additional cuts in the state’s current budget after a report showed tax collections this month were $71 million short of expectations.

Parkinson said he will outline a plan next week to address the revenue shortfall. He described further spending cuts as “a last option” but said they must be considered.

The Democratic governor had said previously that he opposed further cuts because he believed they would cripple public schools, social services and other government programs. He proposed raising sales and tobacco taxes to forestall future reductions.

“The situation that we face right now, I think you have to look at all possible options,” he told The Associated Press. “It would be disingenuous to say that this number wasn’t disappointing and doesn’t cause us to re-evaluate the budget situation in its entirety.”

The Democratic governor’s comments came only hours after House Speaker Mike O’Neal, a Hutchinson Republican, called for additional cuts to keep the current budget balanced.

Other legislative leaders weren’t ready to join O’Neal in pushing for new spending cuts. They said they need to know how much of the shortfall is tied to the state’s soft economy and how much to Kansas paying income tax refunds earlier than expected.

Friday’s report complicated an already difficult debate over the budget and tax policy. It came only hours after House members gave first-round approval to a bill aimed at creating jobs by expanding an existing business tax break.

Parkinson and the Republican-controlled Legislature must keep the current budget in balance and eliminate a budget shortfall for fiscal 2011, which begins July 1. The 2011 gap is projected at $416 million, but that figure will rise next week after legislative researchers consider Friday’s report.

“This obviously is a game-changer,” O’Neal said. “These numbers are grim enough that we will have to make adjustments.”

The state expected to collect $266 million in taxes in February and took in $195 million, a difference of 27 percent.

It was the third consecutive month collections fell short of expectations. The gap for the 2010 fiscal year through February is now $105 million, with total tax collections of $3.1 billion falling 3.3 percent short of expectations.

Officials said Kansans appear to be filing for income tax refunds more quickly this year than last. That could mean fewer refunds than expected in March and April — causing a rebound in tax collections.

Senate President Steve Morris, a Hugoton Republican, rejected the call for new budget cuts.

“We don’t know what the March numbers are,” he said. “We don’t know what the April numbers will tell us.”

The state had five rounds of cuts and other adjustments last year to keep the 2010 budget balanced. If revenues met expectations for the entire fiscal year, the state would break even.

After the February figures were released, Parkinson issued a statement saying the state will overcome its financial problems by “not panicking.” He told AP that the news is “very bad.”

“One of the mistakes that people can make when facing a difficult budget situation is to act too quickly and not thoroughly examine all their options,” he said.

Raising taxes has proven unpopular so far, and many Republican legislators haven’t given up on using tax breaks or incentives to stimulate the economy.

On Friday, the House voted 84-27 to give first-round approval to a bill expanding a tax break for businesses that move workers to Kansas from other states. Members plan to vote again Monday to determine whether the measure goes to the Senate.

Under the bill, more companies would be eligible, as would nonprofit groups and even some federal government agencies. Also, the wages they’d have to pay would be lower than they have to pay now to qualify.

The tax bill is Sub for HB 2538.

A previous version of this story, citing out-of-date figures from the Department of Revenue, incorrectly stated the size of the state budget deficit.

Comments

Randall Barnes 5 years, 4 months ago

State officials attributed part of the decline to Kansans seeking income tax refunds earlier than they did last year. How about the smoking ban keeping the smokers out of the bars not making any revenu there. maby they need to increase the tax on snow shovels in lawrence that should make up for any short fall.

LiberalDude 5 years, 4 months ago

Hmm.... maybe they should give some more tax breaks to corporations and rich people.

Chris Ogle 5 years, 4 months ago

What a surprise. The more you earn, the more you pay. Who is making more these days???

headdoctor 5 years, 4 months ago

Imagine that. The citizens of Kansas are spending less because they don't have it or are having to live with in their means. To bad politicians can't learn that. The Legislators are to busy with their wankathon. At this point it would almost be funny if the Kansas Government goes completely under because they are to busy concerning themselves with every stupid thing they possibly can think of instead of addressing the problems.

kansasmutt 5 years, 4 months ago

You aint seen nothin yet. Kansas is just now feeling what the west and east cost have had for over 36 months.You throw in some stupid new laws and your going to see an economic downturn like none ever seen in this state. This state will be busted in 3 months, yep, 3 months and Kansas will be another one on the list looking for a bailout like CA , NY and other states. If the smoking ban passes, mark my words " you will see a reduction in sales tax collections for the next 3 months of not less than 40% lower " This is enough to drain every single dime Kansas has. Every bill being intorduced and passed is cutting into the states revenue unlike anything ever seen in modern days. This smoking ban alone is going to cost buzillions and not have any financial benifit for at least 20 years if not longer , or at all . See ya in the poor house .

headdoctor 5 years, 4 months ago

kansasmutt (anonymous) says... You aint seen nothin yet. Kansas is just now feeling what the west and east cost have had for over 36 months.You throw in some stupid new laws and your going to see an economic downturn like none ever seen in this state. This state will be busted in 3 months, yep, 3 months


We are already broke. The tax revenues are not enough to cover the budgeted expenses but I believe you are right. February is usually a bad month but there is no guarantee that the next several months worth of revenue wont be below projections. The Legislators are going to screw around until it has to break everyone just to keep the basics running. When people are scared of the economy they tend to hang onto their money if they have any to hang onto. This type of news just makes those who would spend even more protective of what they have.

headdoctor 5 years, 4 months ago

I can only assume they are complaining about January's tax payments that were due on the 25th of this month. It will be interesting to see what February actually generates. I am thinking it could be even less.

situveux1 5 years, 4 months ago

If legislators hadn't spent every last penny they thought Topeka had, this "shortfall" wouldn't even need to be discussed. Actual cash is off of projections by what, around 3% it said? State law says they're supposed to have a 7.5% ending balance. If they'd follow their own laws, this wouldn't even need to be discussed.

Of course, what good is a law if you can't break it, right?

Gecko 5 years, 4 months ago

USED to be, the County would offer you a 2% overall reduction in your personal property tax, IF you paid the whole entire amount by no later than the 20th of December. Now that there's ZERO incentive for anyone to want to come in and pay up to receive any reward for having done so, you've got guys like this http://www.ktka.com/videos/2009/dec/17/27231/?more_like_this running around, all over the place! Bring back the 2% bribe for being good eggs, and we'll go back to paying our bill ahead of time so you can get back in the black, you dad-burned fool politicians!

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