Kansas tax revenues plunge again
05/30/2014 3:50 PM
06/03/2014 2:23 PM
Kansas revenues plunged again in May, leaving the state more than $300 million below estimates for the current year.
The state reported Friday afternoon that revenues fell $217 million below estimates in May, the second month in a row they came up short of expectations.
The latest decline leaves the state about $310 million short for the current fiscal year, which ends June 30.
The numbers again raise questions about Gov. Sam Brownback’s income tax cuts from 2012 and 2013 and their effect on the state’s financial health.
Brownback’s administration attributes the falling revenues to taxpayers cashing in investments early before capital gains taxes increased in 2013.
The shift inflated tax revenues for 2013 but left less money to be taxed in the future, state officials said.
“Unfortunately, we underestimated, as did other states, the impact of the federal fiscal cliff,” Revenue Secretary Nick Jordan said in a prepared statement.
Critics have blamed Brownback’s income tax cuts, which were cited recently when Moody’s Investors Service downgraded the state’s credit rating at the end of last month.
Moody’s warned that the income tax cuts — without offsetting measures such as spending cuts — would drain the state’s reserves. That, the ratings firm said, would pose a “significant credit weakness.”
The rating agency cautioned that spending cuts won’t be easy because of court-ordered spending on schools, keeping up with Medicaid demands and funding the state’s pension system.
Forecasts already indicate the state could exhaust most, if not all, of its reserves by fiscal year 2016, based on its current spending trajectory.
“It’s time he accept responsibility,” said Senate Minority Leader Anthony Hensley, a Topeka Democrat, referring to Brownback.
The Associated Press contributed to this report.
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