News Briefs

Kansas tax revenue below expectations in April, still $384 million ahead of last year’s pace

By: - May 2, 2023 4:59 pm
The Kansas Department of Revenue said state tax collections of $704 million in October exceeded expectations by 11% or $73 million. It was the 27th consecutive month state tax revenue surpassed the forecast. (Getty Images)

The Kansas Department of Revenue reports state tax collections from all sources through nine months of the current fiscal year was $384 million higher than at this time last fiscal year. (Getty Images)

TOPEKA — The Kansas Department of Revenue said reduction in the state sales tax rate on groceries contributed to an $8 million decline in revenue from that source when comparing last month’s collections to results in April 2022 prior to the tax cut.

A law endorsed by the Republican-led Legislature and signed by Democratic Gov. Laura Kelly sliced assessment on food from 6.5% to 4% on Jan. 1. The rate is scheduled to fall to 2% on Jan. 1, 2024, and to reach zero on Jan. 1, 2025.

The state Department of Revenue said collection of retail sales tax in April totaled $237 million or $5.5 million less than anticipated for the month. The amount was $7.9 million less than the $244 million state government took in from sales tax during April 2022.

Overall, the state accounted for $1.31 billion in revenue from all sources during April, which was $24 million beneath the estimate developed by analysts and represented a substantial fall from the April 2022 total of $1.53 billion. Nevertheless, Kansas has banked $8.3 billion in tax revenue during the initial three quarters of the fiscal year. That placed the state $384 million ahead of last year’s pace at this point in the fiscal year.

A steep decline in state income tax receipts — there was a $215 million drop from April 2022 to this April — left the treasury with $958 million in new income tax revenue last month. The figure reflected a year-to-year 41% slump in individual income tax paid and a 150% surge in corporate income tax revenue.

Mark Burghart, the state’s revenue secretary, said the explanation was both simple and complex. In part, he said, decline in individual income tax revenue was attributable to having two fewer tax processing days after the April 18 deadline than in April 2022.

The more complicated reason was implementation of the 2022 law influencing decisions about payment of income tax at pass-through businesses such as partnerships or S corporations, he said.

“The lower individual income tax receipts and higher corporate income tax receipts reflect the impact of the SALT Parity Act, which allows owners of pass-through entities to elect to have the pass-through income taxed at the entity level rather than at the entity owner level,” Burghart said.

Kansas reported individual income tax revenue in April of $593 million — far below the $1.01 billion gathered in April 2022. On the other hand, state corporate income tax generated $354 million in April, compared to $141 million in April 2022.

In other taxation categories, state revenue on cigarettes fell in the year-to-year comparison. In April, Kansas secured $6.1 million from taxation on cigarettes, which amounted to a reduction from $9 million in April last year. Liquor enforcement tax revenue climbed from $5.6 million in April 2022 to $5.9 million last month.

The state severance tax on natural gas slipped to $919,000 in April from $2 million in April 2022, while the severance tax on oil fell to $2.8 million in April from $3.3 million in April 2022.

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Tim Carpenter
Tim Carpenter

Tim Carpenter has reported on Kansas for 35 years. He covered the Capitol for 16 years at the Topeka Capital-Journal and previously worked for the Lawrence Journal-World and United Press International.