Topeka Kansas collected $23 million more in tax revenues than it expected in July, and the release of the figures Friday intensified a partisan debate over spending cuts pushed earlier this year by Gov. Sam Brownback and fellow Republicans in the Legislature.
The state Department of Revenue reported that tax collections exceeded $437 million for the month, when the state’s official projection was $414 million. The surplus is 5.6 percent, and it was the fourth consecutive month that tax collections exceeded expectations.
Revenue Secretary Nick Jordan said it’s a sign the state’s economy is growing, something also suggested by better-than-expected revenues from the state’s sales and individual income taxes.
For now, the surplus funds will bolster the state’s cash reserves, and that’s a sore point for many Democratic legislators. The budget for the current fiscal year, which began July 1, cuts overall state spending by 6.1 percent, and some Democrats questioned whether the reductions in the $13.8 billion spending plan needed to be so deep.
“The state is just piling more money into its bank account,” said House Minority Leader Paul Davis, a Lawrence Democrat. “We could have avoided some of these painful cuts.”
Davis is particularly upset because the Department of Social and Rehabilitation Services is closing nine of its local offices, including one in his hometown, to trim its administrative spending. Also, the state has reduced its base aid to public schools by $232 per student, or 5.6 percent, dropping the figure from $4,012 to $3,780.
Meanwhile, the state ended its last fiscal year on June 30 with $183 million in cash reserves. The $23 million surplus from July collections adds to the cushion.
But Brownback spokeswoman Sherriene Jones-Sontag noted that guidelines in Kansas law — routinely circumvented in bad financial times — say the state should have ended the fiscal year with more than $425 million in cash reserves.
She said the ongoing uncertainty over what would happen if Congress doesn’t raise the federal government’s debt ceiling have shown the need to build the state’s cash reserves.
“We have a long way to go,” she said. “Whether it’s a natural disaster or the possibility of losing federal funds, Kansas must be prepared.”
But Brownback’s administration also is having internal discussions about rewriting tax laws next year, and the governor has said reducing individual income taxes is a goal because it’s a way to spur economic activity. Many Democrats believe his willingness to cut spending is tied to his desire to lower taxes.
“The issue for the next session is going to be, what are we going to do with this money?” Davis said. “Are we going to restore some of the painful cuts that were made or is it all going to go to a large tax cut?”