Kansas taxes nearly $13M less than anticipated in October

kansas statehouse capitol

TOPEKA, Kan. (AP) — Kansas collected nearly $13 million less in taxes than anticipated in October, with the latest disappointing report Tuesday coming a week before an election determines whether voter discontent with Gov. Sam Brownback will cost his fellow Republicans seats in the Legislature.

The state Department of Revenue’s report marked the sixth consecutive month of lower-than-expected tax collections. Brownback told The Associated Press that it’s another sign of a “rural recession” tied to slumps in agriculture and energy production and affecting other states.

“The urban areas are doing well, and the rural areas are just — some of them are doing very poorly,” Brownback said. “There’s enough of them that it’s really hurting the revenue picture.”

But Brownback’s fellow Republicans have faced a backlash for months over the state’s financial problems. Kansas has struggled to balance its budget since GOP lawmakers slashed personal income taxes in 2012 and 2013 at the governor’s urging in an effort to stimulate the economy.

The Department of Revenue said Kansas collected $447 million in taxes last month, when the official projection was nearly $460 million, for a shortfall of 2.8 percent. Since the current budget year began in July, tax collections, at $1.8 billion, have fallen more than $80 million short of projections, for a shortfall of 4.2 percent.

Kansas is now facing a projected shortfall in its current, $15.5 billion budget of at least $70 million and potential spending cuts or tax increases for the next fiscal year beginning in July 2017. State officials, legislative researchers and university economists will issue a new fiscal forecast next week that is expected to be more pessimistic in projecting revenues — two days after the election.

“Republicans, independents, Democrats, whomever, none of them believes a word that comes out of the governor’s office,” said Tucker Poling, the Democratic Party vice chairman in Johnson County, which has affluent Kansas City suburbs and some of the state’s hottest legislative races. “There’s a credibility chasm.”

Fourteen conservative GOP legislators lost their seats in the August primary, and Democrats are hoping to cut into Republican supermajorities in next week’s election.

The state’s tax collections have fallen short of expectations 33 of the 46 months since the first income tax cuts championed by Brownback took effect in January 2013. In the 46 months before that, the state exceeded its projections 24 times.

But the Department of Revenue’s report showed that personal income tax collections both exceeded projections during the past four months and are running almost 6 percent ahead of collections during the period in 2015.

Meanwhile, sales tax collections are 5.6 percent below expectations for the past four months and trail last year’s collections by 2.1 percent. Corporate income tax collections are far below both the estimates and last year’s collections.

Revenue Secretary Nick Jordan said the numbers suggest a decline in sales in rural areas, softer corporate revenues and perhaps higher wages in a tight labor market.

“We feel good about the individual income tax doing as well as it’s doing,” Jordan said in an AP interview. “The one tax we cut is growing.”

Jordan added later: “This is just national, regional economic forces at work, causing the crunches.”

Both Poling and Clay Barker, the Kansas Republican Party’s executive director, doubted the latest revenue report or the debate over it will influence voters’ behavior, suggesting few remain undecided about Brownback.

“A lot of Republicans pride themselves on fiscal policy management,” Barker said. “It makes them feel uncomfortable when they keep seeing the report, revenue estimate and revenue didn’t match.”

 

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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