Topeka — Tax revenues came in more than $10 million short for the month of August, the Kansas Department of Revenue said Thursday, putting the state closer to the point where Gov. Sam Brownback may need to order more spending cuts to balance the state budget.
Although individual income taxes, one of the big sources of revenue shortfalls in earlier months, came in nearly $15 million above estimates, that was offset by big shortfalls in retail sales and corporate income taxes.
“Individual income taxes beat estimates for the second month of the fiscal year, which is encouraging, but corporate, sale and use tax receipts continue to lag pulling down the overall totals,” Secretary of Revenue Nick Jordan said in a statement that accompanied the report.
Although the state had expected to take in about $10 million in corporate income taxes, it actually received only about $304,000, prompting many people to ask what had happened since corporate income taxes were not part of the controversial tax cuts that Gov. Sam Brownback championed in 2012 and 2013, cuts that Democrats have said are the major reason for the state’s persistent shortfalls.
Jordan, however, said the numbers in Kansas reflect a national trend, and he cited recent statements from Moody’s Investor Services saying most states that tax corporate income can expect to see declining revenues from that source.
Still, the report was bad news politically for Republican lawmakers who face re-election in a little more than two months, and Democrats were quick to pounce on the report.
“This is another indication that Kansans need to speak up by voting in November to replace those legislators who have rubber stamped Sam Brownback’s irresponsible agenda,” Senate Democratic Leader Anthony Hensley of Topeka said.
At the end of the 2016 legislative session, Brownback was forced to order $97 million in cuts to the budget bill he had just signed in order to balance the budget for this fiscal year.
State officials estimated at that time that if revenues came in as projected, the state would end this fiscal year on June 30, 2017, with a balance of $93 million in the general fund.
Since then, however, revenues have continued to come up short, missing the mark by $34 million in June, another $12.8 million in July, and now an additional $10.2 million in August.
That could put the projected ending balance as low as about $35 million as of this month, with two more months of revenue reports due to come out before the Nov. 8 general elections.
And between now and then, the Kansas Supreme Court will hear oral arguments Sept. 21 in a school finance lawsuit in which four plaintiff school districts are seeking an order for as much more than $500 million a year in additional funding for K-12 education.
The court is not expected to rule on that case until after the elections, but a decision could come before, or early into, the 2017 legislative session.
During that session, lawmakers are expected to write a new school finance formula to replace the one they repealed in 2015, and on Wednesday Brownback stood with top officials from the Kansas State Department of Education to solicit ideas from education groups and the public about what that formula should look like.
But Hensley said the August revenue report showed that the biggest question facing the state is not the formula, but where the money to fund it will come from.