Kansas tax collections continue to improve

? Kansas budget officials got more good news Wednesday with a report showing total tax collections in October came in $31.7 million higher than expected.

That brings the total surplus so far this fiscal year to just under $105 million, money that lawmakers will likely need in order to respond to a Kansas Supreme Court ruling Oct. 2 that said the state is still not adequately funding public education.

Kansas lawmakers this year overrode Gov. Sam Brownback’s veto of a bill raising income taxes and reversing course on many of the tax cuts he championed in 2012, tax cuts that many blamed for the state’s long period of revenue shortfalls that forced deep cuts in spending on Medicaid, highways and higher education.

That has accounted for much of the improved revenue picture in recent months. But what was especially pleasing to revenue officials was growth in corporate income taxes and retail sales taxes, two sources of revenue that lawmakers did not touch this year.

“This trend of higher than last year corporate receipts confirm expectations of an improved economic climate taking root,” Revenue Secretary Sam Williams said in a statement accompanying the report. “That becomes even more distinct when looking at the modest growth in sales tax receipts.”

Since the current fiscal year began on July 1, sales tax receipts have come in $27 million higher than expected and $30 million higher than the same period a year ago.

Similarly, corporate income taxes have come in $25.7 million higher than expected and nearly $24 million higher than a year ago. That represents a 28 percent increase compared with the first four months of last fiscal year.

One area where revenues have fallen short, but which public health advocates would still say is good news, is in cigarette taxes. They have come in $2.4 million, or 5.24 percent, below last year’s level.

Wednesday’s report was released the day before the state’s Consensus Revenue Estimating Group meets to revise the official revenue estimates for this year and to issue the first estimates for revenue collections in the next fiscal year.

The estimating group is made up of officials from the Legislature’s Research Department, the governor’s budget office and Department of Revenue, as well as economists from the University of Kansas, Kansas State University and Wichita State University.

Most observers are generally expecting those estimates to go up, both because of the tax increase lawmakers passed this year and the improving corporate and retail sales tax collections. By law, the governor and legislators have to use those estimates when crafting the final state budget.

How much the estimates go up, however, remains an open question. In addition to pressure from the Supreme Court to increase K-12 education spending, lawmakers are also under pressure to restore cuts that have been made in recent years to higher education, the state’s retirement system and other state services.