Kansas Gov. Laura Kelly says October tax revenue more than $60 million above estimates don’t negate potential of a revenue shortfall and the need of the federal government to approve a relief package for financially struggling states. (Sherman Smith/Kansas Reflector)
TOPEKA — Kansas’ individual income, retail sales as well as liquor and cigarette tax collections surged in October to deliver $62 million more than projected to the state treasury and offer a slice of budgetary optimism despite lingering concern of a revenue shortfall this fiscal year.
The haul last month left the state with $178 million or 6.6% more in revenue than expected through the initial four months of the fiscal year.
In April, Kansas’ official revenue forecasters said the state should prepare for a shortfall of $650 million by the end of June 2021 absent reductions in spending or increases in revenue. The state is constitutionally prohibited from running an annual budget deficit, but each month of positive tax revenue news shrinks the hurdle for the 2021 Legislature and Gov. Laura Kelly.
The economic impact of COVID-19 sparked rolling waves of unemployment and business disruption nearly impossible for forecasters to predict. So far, more than 1,000 Kansans lost their lives during the coronavirus pandemic.
“This revenue growth, while unmistakably positive, has to continuously be assessed against the backdrop of the COVID-19 pandemic and the uncertainty it causes for the economy going into the winter months,” said Mark Burghart, secreatary of the Kansas Department of Revenue.
The Consensus Revenue Estimating Group, comprised of state analysts and university economists, is scheduled to meet Friday to update their official assessment of the economic outlook in Kansas and implications for the state’s general fund.
In October, state tax receipts were $595 million, which was 11.6% or $61.8 million above the forecast. The total was $43.6 million more than in October 2019.
Kelly, the Democratic governor, said the encouraging revenue report shouldn’t mask reality that Congress must adopt a federal rescue bill to help states, counties and cities come to terms with significant tax revenue problems tied to COVID-19.
“As the COVID-19 pandemic continues to impact Kansans and threaten our state’s economic uncertainty, Congress must pass an economic relief bill,” she said. “While the positive revenue trends are encouraging, the future of this revenue growth will be tied to the support we get from Washington and to every Kansas community using the tools we know work to slow the spread of COVID-19.”
The state’s October receipts for individual income taxes of the current fiscal year were $283.6 million, a 9.1%, or $23.6 million, increase from the estimate. That was $23.6 million more than collected in October last year.
Corporate income tax collections were 74% or $11.1 million more than estimated at $26.1 million for October. The new monthly total represented a $138,000 decrease from last October.
Retail sales tax collections climbed $12.9 million or 6.6% from the October estimate to $210.9 million. The figure for the month was $10.2 million greater than October one year ago.
Collection of compensating use tax, a companion of the sales tax, reached $50.7 million, an increase of 30% or $11.7 million above the October estimate. Payment of compensating use tax grew by $9 million compared to October of last year.
In October of this year, state tax collections on cigarettes was $10.2 million, or $276,000 above the projection. For liquor, $9.5 million in taxes surfaced in October, or $600,000 more than anticipated. The monthly severence tax on oil and gas was $1.8 million, double the estimate.
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