Kansas tax collections $47M short of expectations in January

? The size of the state’s budget hole got bigger Friday when the Kansas Department of Revenue reported that January revenues came in $47.2 million short of projections.

That means the total amount of money actually collected so far this year has been $59 million short of projections. And those projections, which were last updated in November, were already showing that revenues would be $279 million short of what is actually needed to fund this year’s budget.

The news came out just as the Kansas Republican Party was beginning its annual state convention in Topeka.

House Speaker Ray Merrick, R-Stilwell, declined to discuss the report.

“I don’t talk to reporters at social events,” Merrick said.

Revenue Secretary Nick Jordan attributed the shortfall to larger-than-expected tax refunds issued in January, $22 million more than in January 2014.

“We are glad that Kansas taxpayers are getting their refund checks earlier than last year, unfortunately that negatively affects our tax receipts for this month,” Jordan said.

He also said that sales taxes came in lower than expected, “possibly because of a shift to online shopping where sales tax is frequently not collected.”

Overall, individual income taxes came in $35.5 million short of projections, while sales and use taxes were $10.3 million short. Oil and gas severance taxes also came up short.

The latest consensus estimates of how much money the state expects to receive were published in November, and those showed the state would come up about $279 million short of what it needed to fund the current year’s budget.

The latest report showing actual month-to-month tax collections only adds to that budget gap and complicates the job facing Kansas lawmakers this session.

“Up a creek without a paddle,” was the assessment of Sen. Laura Kelly, of Topeka, the ranking Democrat on the Senate Ways and Means Committee.

House Democratic Leader Tom Burroughs, of Kansas City, Kan., was equally critical.

“These numbers are like a financial nightmare, and it’s a nightmare that will end tragically if the governor doesn’t wake up soon,” Burroughs said. “There are only so many excuses and short-term fixes available, but the governor has tapped most of them out.”

Earlier in the week, House and Senate budget committees had just begun delving into Republican Gov. Sam Brownback’s budget proposal. It includes adjustments for the rest of this fiscal year and lays out his spending plan for the next two fiscal years.

At that time, Brownback was proposing to sweep $158 million out of the state highway fund to pay for general government expenses this year. He was also calling for reducing the state’s contribution to the Kansas Public Employees Retirement System and cutting about $127 million out of K-12 school operating budgets.

But Senate President Susan Wagle, R-Wichita, said the revenue figures released Friday make the job more difficult.

“I would anticipate that, yes, we will need to make greater cuts in this year’s budget than we originally anticipated,” Wagle said.

But she and other Republicans said they still stand by the tax cuts enacted in 2012 and 2013.

“We’ve returned hundreds of millions of dollars to taxpayers’ pockets,” Wagle said. “Unfortunately we haven’t addressed some of our structural problems and cost-drivers.”

Rep. Scott Schwab, R-Olathe, said the tax cuts may have caused short-term problems for the budget, but he still believes they will produce long-term benefits for the economy.

“Because our unemployment is lower than the national average,” Schwab said. “And normally, we trend behind the national average, so we’re creating jobs.”