Tax cuts will reduce state revenue more than Great Recession

Topeka — State tax revenue is expected to decline more over the next fiscal year than it decreased during the three years of the Great Recession, according to new state fiscal estimates.

New revenue figures show that the state will receive $5.454 billion in tax revenue for the fiscal year that starts July 1– a decrease of $745 million from the estimated $6.199 billion in revenue during the current fiscal year, which ends June 30.

During the recession, tax receipts fell to $5.191 billion in fiscal year 2010 from $5.809 billion in fiscal year 2007. That’s a decline of $618 million over a three-year period.

The bulk of the $745 million reduction in receipts over the next fiscal year includes $450 million less in income tax and $270 million fewer dollars in state sales tax.

The revenue estimates are compiled by the Consensus Revenue Estimating Group, which includes the state Division of the Budget, Legislative Research Department and three consulting economists from state universities.

Last year, Gov. Sam Brownback signed into law cuts in income tax rates, including exemptions from state income taxes on non-wage income for 190,000 businesses, and eliminating tax credits for low-income Kansans.

In 2010, facing record revenue declines, the Legislature approved raising the state sales tax from to 6.3 percent from 5.3 percent, and then allowing that rate to fall back to 5.7 percent after three years.

Saying he wants to avoid cuts to higher education, Brownback is now pushing to make the 6.3 percent sales tax permanent. Democrats say the tax plan signed by Brownback has produced a fiscal crisis.