Tax receipts in Kansas continued to miss monthly estimates in September, and revenue totals for the fiscal year’s first quarter are now more than $40 million below expectations.
“It’s very troubling,” said Rep. Melissa Rooker, a Fairway Republican.
“This is a symptom of the cancer at the heart of our tax code, and until we get serious about addressing the loopholes that were created, we will continue to see declining revenues,” she said.
Revenue for September was $31.7 million below estimates, or 5.7 percent, although receipts did exceed September 2014, Kansas Revenue Department officials said Thursday in a news release.
State sales tax revenue was $12.5 million below estimates for the month. Individual income tax receipts were $12.2 million off the mark. And corporate income taxes were $7.5 million less than expected.
Other revenue sources, such as insurance premiums, interest, transfers and agency earnings, brought total receipts for the month to $523.8 million.
For the first quarter of the fiscal year — July, August and September — tax receipts were short of estimates by $42.5 million, or about 3 percent. Total receipts for the first quarter of the fiscal year were $1.35 billion.
The shortfalls are worrisome because budget officials have projected just a $90 million cushion for the end of the fiscal year.
Led by Gov. Sam Brownback, the Legislature slashed state income taxes in 2012. Faced with a huge budget hole last session, lawmakers increased sales and cigarette taxes. Rooker said relying on sales taxes to prop up the budget is a mistake because of its instability.
“I think a true leader admits a course correction is required,” Rooker said. “There’s economic philosophy and real-world economic indicators. We need to get real and to deal with the issues that are driving this.”
Revenue Secretary Nick Jordan cited the slumping oil industry.
“Many sectors showed growth, but the dramatic drop in oil, gas and farm income experienced across the Midwest states also affected Kansas revenue,” he said in the news release.
But other states aren’t experiencing the overall revenue slide that Kansas is seeing, said Rep. Stephanie Clayton, an Overland Park Republican.
“I have heard repeatedly from constituents who are very, very displeased with this tax plan,” Clayton said. “It’s time for the Legislature to wake up to the magnitude of the damage this is doing to the state.”
Revenue news also was bad for August. Sales tax receipts in August were $3.2 million short of expectations, and the state paid out $22.3 million in “unanticipated” income tax refunds.
Those refunds and other decreases sank August revenue to more than $30 million below expectations. That was offset by budget adjustments, bringing the shortfall to about $6 million.