TOPEKA State revenues in July came in $1.6 million above estimates, the first time that has happened since March, the Kansas Department of Revenue said Thursday.
That was good news for Gov. Sam Brownback, who has been hit with a barrage of criticism over previous revenue shortfalls.
“Withholding tax receipts show that more Kansans are working and earning more money, helping grow the state’s economy,” Revenue Secretary Nick Jordan said. “We are cautiously optimistic about these results but pleased to see further evidence that Kansans are getting back to work.”
Overall, the state collected $408.6 million in July. That was 4 percent less than it collected during the same month last year, reflecting the impact of additional tax cuts that have gone into effect since then.
Sales tax collections, at $183.9 million, were down 4.9 percent compared to July 2013. Department of Revenue spokeswoman Jeannine Koranda said that was the effect of lowering the state sales tax rate on July 1 last year.
Because sales tax collections typically lag a month behind the actual sales, she said last year’s number reflected sales that occurred in June 2013, before the rate dropped from 6.3 percent to 5.7 percent.
Individual income tax collections were also down. Kansas collected $147.9 million from income taxes in July, mainly from payroll withholdings, which is almost exactly what had been expected. But that was $15.5 million, or 9.5 percent less than it collected in July 2013.
Koranda said that was the result of the second phase of income tax cuts enacted by the 2012 Legislature. Starting Jan. 1, 2013, the state’s three tax brackets were collapsed into two and the overall rates were reduced.
Additional rate cuts are scheduled through the next four years, until 2018 when the top rate will be 3.9 percent, and the bottom rate will be 2.3 percent.
Still, the July revenue numbers were significantly better than the last three monthly reports, which added up to a combined $338 million shortfall.
Those reports set off a firestorm of criticism in the national news media and from Democrats who said they proved Brownback’s tax cuts were failing to stimulate the economy and were putting the state in a deep financial hole.
Lawrence Democrat Paul Davis, who is challenging Brownback for re-election, said this month’s numbers do not vindicate the governor.
“This news brings us no closer to solving the problem Sam Brownback created with his economic experiment,” Davis said. “The Kansas economy is stagnant and we face (a) more than $1 billion projected deficit in a few short years, calling into question the state’s ability to properly fund our schools.”
But two key legislative Republicans issued a statement Thursday defending the tax cuts, despite the lower revenues.
Sen. Ty Masterson, who chairs the Senate Ways and Means Committee, and Rep. Gene Suellentrop, chair of the House Appropriations Committee, said those tax cuts have stimulated the economy.
“Kansas has added 55,000 private sector jobs since 2011, and we continue to have one of the lowest unemployment rates in the nation,” Masterson and Suellentrop said in the joint statement.
According to figures from the Bureau of Labor Statistics, however, those 55,000 new jobs represent only 5.1 percent growth in private sector employment. Nationwide, private sector employment grew 7.7 percent over that same period.
“While it is good to hear that revenue is not under water for the month of July, this still isn’t the ‘shot of adrenaline’ to the Kansas economy that Gov. Brownback promised,” Senate Minority Leader Anthony Hensley, D-Topeka, said. “This is far from the growth needed to get out of the self-inflicted budget crisis that Kansas is facing as the direct result of Brownback’s reckless income tax cuts.”