Kansas revenues miss the mark in July; state starts new fiscal year with a shortfall

? The state of Kansas started off the new fiscal year in July with a $12.8 million shortfall in tax collections, the Kansas Department of Revenue said Monday.

The shortfall was fueled by slower-than-expected growth in retail sales taxes, which came in $10.8 million below estimates, and a steep falloff in corporate income taxes, which were $5.9 million below estimates and 50 percent lower than July 2015.

Those shortfalls were partially offset by modest growth in individual income taxes, which were $1.1 million higher than estimates, and 8.5 percent higher than July 2015.

Total tax receipts in July were $9 million higher, or 2.7 percent greater, than in July last year. Those figures prompted Department of Revenue officials to express some optimism.

“We are pleased to start the new fiscal year with positive individual income tax growth, but concerned with the continued weak corporate tax receipts, which many states in our region are experiencing,” Revenue Secretary Nick Jordan said. “Sales tax receipts remain weak in counties with significant agriculture and oil economies.”

But Monday’s report continues a trend that occurred throughout all of the last fiscal year when revenues fell short nearly every month. Even after revenue forecasts were revised downward in April, the final total for the year was $106 million less than expected.

Those shortfalls forced Gov. Sam Brownback to order $97 million in spending cuts for state agencies heading into the new fiscal year, which began July 1, including a 4 percent cut of $10.7 million to the University of Kansas Lawrence campus and the KU Medical Center in Kansas City.

KU officials are expected to announce later this month how those cuts will be distributed across the university system.

The continuing shortfalls have also become a campaign issue heading into the Aug. 2 primaries. Many analysts have blamed the shortfalls on the sweeping tax cuts that Brownback and his allies in the Legislature championed in 2012 and 2013, and many of Brownback’s conservative allies in the Legislature are now facing strong challenges from more moderate Republicans.

House Democratic Leader Tom Burroughs of Kansas City was quick to issue a statement similar to many he has issued in the past, blaming Brownback for the state’s financial condition.

“The financial hole Gov. Brownback and his rubber-stamp allies in the Legislature have created keeps getting deeper,” Burroughs said. “This only underscores the need for a more moderate and Democratic Legislature next year and that starts in the voting booths (Tuesday) and this November.”