State revenues $28 million short for June; $338 million for fiscal year 2014

? State tax collections came in $28 million below expectations for the month of June and $338 million short for all of fiscal year 2014, the Kansas Department of Revenue said Monday.

That report is sure to add fuel to the election-year debate over Gov. Sam Brownback’s economic policies, which he says are stimulating the Kansas economy, but which Democrats say have been reckless and ineffective.

The biggest shortfall was in individual income taxes, which were short by $24.8 million, or 10.8 percent for the month.

It was the third straight month that state revenues came in below projections, although the June figures were not as dramatic as the $217 million shortfall in May, or the $97 million shortfall at the end of April.

Still, the June report was worse than Revenue Secretary Nick Jordan had predicted a few weeks ago, when he said he thought the shortfall would be only $10-$20 million short.

The biggest shortfall, both for the month and the year as a whole, was reflected in individual income taxes, which were off by $24.7 million, or 10.8 percent, for the month, and nearly $307 million, or 12.1 percent, for the whole year.

That’s significant because individual income taxes make up slightly less than half of all the tax revenue collected by the state.

Department of Revenue officials said that was the result of “a significant drop in estimated payments which are calculated on the previous year’s income and reflect a shift primarily in capital gains income.”

In 2012, Brownback pushed a massive tax cut through the Republican-controlled Legislature which, among other things, eliminated income taxes on pass-through business income from sole proprietorships and limited liability corporations. That law also reduced tax rates on typical wage income.

The Legislature’s independent Research Department estimated at the time that those changes would reduce state revenues by more than $4.5 billion through fiscal year 2018.

But administration officials disputed those estimates at the time, arguing they did not take into account the new jobs and economic activity that would be generated by the tax cuts.

In 2013, lawmakers cut taxes by another $341 million.

Rep. Paul Davis, of Lawrence, a Democrat who is challenging Brownback for re-election, said Monday that the tax cuts had failed to stimulate the economy. He called for postponing the second round of tax cuts, effectively freezing tax rates at their current level, at least until school funding can be restored to pre-recession levels.

“Our governor has given away $2 billion worth of tax revenue without the guarantee of a single Kansas job,” said former Lt. Gov. John Moore, a Democrat, who was named a senior adviser to the Davis campaign. “That is not pro-growth; that is profoundly irresponsible.”

But Senate President Susan Wagle, R-Wichita, issued a statement saying new investment is being held back in Kansas because of uncertainty about federal policies coming from Washington.

“When Kansans have confidence that federal leaders are taking steps to control debt and excessive regulation, they’ll go all in,” Wagle said. They will invest their dollars and their ingenuity will boost this economy exponentially.”