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Kansas tax collections $7M below expectations last month

February 2, 2016

TOPEKA, Kan. (AP) — Kansas collected $7 million less in taxes than expected in January, and a top aide to Republican Gov. Sam Brownback said Monday that ongoing problems in key parts of the state’s economy are to blame.

The report Monday from the Department of Revenue came with the House Appropriations and Senate Ways and Means committees preparing later this week to debate proposals for balancing the budget for the fiscal year beginning July 1. The deficit had been projected at $190 million; the shortfall in January pushes it close to $200 million.

The department said the state collected $535 million in taxes last month instead of the $542 million projected in a fiscal forecast issued in November. The shortfall is 1.3 percent. Kansas tax collections have fallen short of expectations in six of the seven months of this fiscal year.

The main culprits were disappointing corporate income tax collections and lower-than-anticipated sales tax collections. Revenue Secretary Nick Jordan said the state’s agriculture and energy industries continue to struggle.

“It’s pretty obvious that it’s oil and ag economies. Those people, they aren’t working. They’re being laid off or their profits are down,” Jordan said during an interview. “They’re just not spending.”

Since the current fiscal year began in July, the state has collected $3.38 billion in taxes. That’s $26 million less than anticipated, a shortfall of 0.8 percent.

Kansas has struggled to balance its budget since the Republican-dominated Legislature slashed personal income taxes in 2012 and 2013 at Brownback’s urging in an effort to stimulate the economy. GOP legislators last year increased sales and cigarette taxes to head off a deficit in the current budget.

Democrats blame Brownback’s fiscal policies for the state’s budget problems.

“It’s time for Governor Brownback and Republicans in the Legislature to admit that what we’re doing isn’t working,” House Minority Leader Tom Burroughs, a Kansas City Democrat, said in a statement.

Brownback has argued that the income tax cuts have stimulated the economy to prevent larger shortfalls in tax collections with slumps in agriculture, energy production and aviation. The state’s unemployment rate in December was 3.9 percent, the lowest figure in nearly 15 years.

“We need those sectors to come back,” said House Majority Leader Jene Vickrey, a Louisburg Republican.

The Department of Revenue noted that personal income tax collections actually were a bright spot in the latest report, exceeding expectations for the month. Though personal income tax collections for the past seven months were lower than anticipated, they’re still running slightly ahead of collections during the same period in 2014-15.

But Sen. Laura Kelly, of Topeka, the ranking Democrat on the Senate Ways and Means Committee, said with the income tax cuts, Kansas relies more heavily on its sales tax to finance state government.

“That’s why you don’t cut off a leg to the stool, because sometimes the other legs are going to get wobbly,” she said.

Later, she added: “We keep denying we have a problem. We keep sticking our head in the sand, living in La-La Land.”

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .

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