Kansas officials started the new fiscal year by announcing that the last one ended worse than expected.
The state missed revenue projections in June by more than $34.5 million. For the year, the Sunflower State ended with a $76.2 million budget shortfall as the fiscal year came to a close Thursday, forcing state officials to make adjustments to balance the budget.
“Unfortunately, Kansas is a part of a national trend, with many states reporting reductions in revenue collections because of a weak economy,” Revenue Secretary Nick Jordan said in a statement. “Corporate income tax receipts are down nationally for 2015’s fourth quarter on an average of 9 percent, according to reports.”
The Kansas Department of Revenue announced Friday that both individual income and corporate tax collections fell compared to last year. Corporate income tax was down almost $63 million, while individual income tax fell $28.6 million.
For June, corporate income taxes were $20.3 million below estimates, while individual income tax revenue dipped almost $18 million compared to the estimate.
Overall, total tax collections were roughly 1.8 percent off the year’s estimates. The state’s tax collections have fallen short of projections nearly every month for the last year.
Other tax collections did see some growth, thanks in part to sales and cigarette tax increases in 2015. Cigarette tax collections grew roughly $50 million, almost a 56 percent increase from the year before. Retail sales tax collection also jumped more than 6 percent, increasing $141 million.
State budget director Shawn Sullivan announced Friday that he would balance the budget by pulling money from the state corrections, transportation and education departments.
It was the second time in as many weeks that money was moved around in the state’s budget to ready Kansas for the start of the new fiscal year.
A week ago, lawmakers gathered in Topeka and agreed on a school finance package. The $38 million agreement helps equalize money between poorer and richer districts, but legislators had to move money from other funds to finalize the deal. It satisfied the Kansas Supreme Court and kept schools open past June 30.
Gov. Sam Brownback and the Republican-dominated Legislature have been criticized for a tax policy that has led to budget reductions and cuts.
In 2012, Brownback described his landmark income tax cuts as “giving a shot of adrenaline” to Kansas. But some state revenues have slowed during his second term in office, forcing lawmakers to continue to make spending cuts and budget adjustments to help the state’s bottom line. As recently as last week, Brownback continued to defend the cuts and the direction his administration has taken the state.
Laura Kelly, the ranking Democrat on the Senate Ways and Means Committee, described Friday’s numbers with one word: Ouch.
“It just reinforces the fact that the governor and the Legislature have created an unsustainable path forward for the state,” she said.
The state also delayed paying almost $260 million to Kansas school districts to help bridge the budget gap. Area school districts are scheduled to receive that portion of the June split on July 7. The delayed payment helps the state with cash flow, said Dale Dennis, deputy commissioner for fiscal and administrative services at the Kansas Department of Education.
“There’s been a delayed payment like this for the last 10 years, but this year it’s about $75 million higher,” Dennis said.