Kansas tax collections came in just $1.7 million shy of projections in March, the state Revenue Department reported Friday. And that’s close enough to produce a sigh of relief from officials.
Sales tax and corporate income tax receipts beat estimates, according to the report, but individual income tax receipts fell short of projections by $14.4 million.
“After a weak month in February, withholding rebounded in March, but not quite as strongly as anticipated,” Revenue Secretary Nick Jordan said in a statement.
“While corporate income, sales and use tax receipts are up, oil severance payments are down. It is a trend that is contributing to a sluggish economy in many rural counties, which depend heavily on oil and commodities.”
Before Friday’s report, monthly tax receipts had fallen short of projections in 11 of the past 12 months. A month ago, the news was much worse. February tax receipts came in $53 million below estimates, and Gov. Sam Brownback immediately ordered a $17 million cut to the state’s university system.
In February, legislators closed a $200 million gap in the current budget, which ends June 30. But then came the shortfall in February’s tax receipts. The budget hole now stands at about $30 million.
“To have a month like this is very encouraging,” said Rep. Marvin Kleeb, an Overland Park Republican and House tax committee chairman, noting that low oil, gas and agriculture prices are hurting the state’s economy.
Sen. Jim Denning, an Overland Park Republican, said even a small shortfall is worrisome because of the state’s budget woes. But, he said, it was good to see sales tax and corporate income tax receipts come in above projections.
“Obviously it’s good news after many, many months of bad news,” Denning said.
House Minority Leader Tom Burroughs, a Kansas City, Kan., Democrat, said that despite the March numbers, he still had “grave concerns” about a budget shortfall this year and about the state’s economy.
“More will have to be done when the Legislature reconvenes in late April to balance the budget and chart a new, fiscally responsible and sustainable path forward,” Burroughs said in a statement. “Job growth is well below the national average, workers’ wages remain stagnant and families are paying record high sales taxes for basic necessities like food and clothing.”
Revenue misses and budget shortfalls have been an ongoing struggle after Brownback and the Legislature cut income taxes in 2012 and 2013. But the governor and Republican allies in the Legislature have maintained that downturns in the state’s oil and agriculture sectors, not tax policy, are to blame for revenue problems.
In March, sales tax receipts came in $5.9 million above projections and corporate income tax receipts were $1.5 million higher than estimates. Individual income tax receipts were about 9 percent below estimates.
Insurance premium tax collections were $6.7 million more than anticipated for March. For the fiscal year to date, the collections were above estimates by $11 million.
Clark Shultz, the Kansas Insurance Department’s director of governmental affairs, said the increase is tied largely to rising health insurance premiums. The 2010 federal health overhaul championed by President Barack Obama has led to more people having coverage and — because of its mandates — consumers paying higher premiums overall, he said.
For the current fiscal year, which began last July, the state has collected about $4.1 billion in taxes, which is about $81 million below estimates.
The Brownback administration and some lawmakers have questioned the state’s revenue estimating process. A panel of administration officials, legislative researchers and economists, a group called the Consensus Revenue Estimating Group, will meet April 20 to revise the state’s revenue projections. The estimates are issued twice a year.
The Associated Press contributed to this report.