DALLAS – Kansas revenues continued to fall short of estimates in August, the second month of the fiscal year.
While overall tax collections of $427 million were 2.3% higher than the same month of 2015, they trailed the budget forecast by about the same percentage, or $10.2 million, according to the Kansas Department of Revenue.
Officials said retail sales and corporate income tax receipt shortfalls drove the miss. Corporate income was $9.7 million less than estimates. Retail sales tax receipts were $14.1 million less than anticipated.
Individual income tax receipts beat estimates by $14.8 million for the month, the department said. The state collected $179.8 million in individual income taxes for the month, $9.3 million more than it collected in August 2015.
"Individual income taxes beat estimates for the second month of the fiscal year, which is encouraging, but corporate, sale and use tax receipts continue to lag pulling down the overall totals," said Secretary of Revenue Nick Jordan.
Corporate income tax receipts appear to be following a national and regional trend as profits are weak, Jordan said.
Moody's Investors Services reported that 31 of the 45 states that levy a tax on corporate incomes expect declining revenues in the future. In Kansas, sales tax receipts have been particularly hard hit by slumping oil and agricultural industries.
Kansas has seen a 50% reduction in sales tax receipts from national industry classification tax codes that include the oil industry, Jordan said. The department's Property Valuation Division is also reporting a 10.2%, or $7.6 million decrease in the type of vehicles tagged for use in the agricultural and oil industries. The category would be directly affected by farm and oil industry vehicle purchases.
To address concerns that monthly revenue receipts are not meeting estimates, even after the forecast was lowered, the Budget Division and governor's office have drafted an external review team of accountants and bankers who are reviewing the Consensus Estimating Process to see if the state can develop a new estimating formula that will be more reliable and accurate, the department said.
The group will present their recommendations to Gov. Sam Brownback's office by late October. Budget officials and the governor's office will then begin planning the budget and present "a workable, structured plan" to the Legislature in January, according to the department.
Kansas has struggled to balance its budget since GOP legislators heeded Brownback's call to sharply reduce personal income taxes in 2012 and 2013 as an economic stimulus.
The ongoing revenue shortfall represents a growing political crisis for Brownback and his Republican affiliates in the Legislature. In August, Republican primary voters rejected 14 legislative incumbents who had supported Brownback's tax cuts. Some of the incumbents were defeated by political first-timers.
More trouble surfaced Thursday in an internal Republican poll obtained by the Topeka Capital-Journal showing 70% disapproval of Brownback.
When asked how they would vote if their incumbent GOP state senator had supported Brownback's political agenda, 57% of respondents said they would consider backing the Democratic nominee. Thirty-three percent said they would prefer re-electing the Republican.
The survey by Remington Research Group, a subsidiary of the Axiom Strategies consulting firm, said 73% of those surey3d believed Kansas government was on the wrong path.
Rep. John Doll, a Garden City Republican who defeated GOP Sen. Larry Powell in the Senate primary, told the Capital-Journal that the survey provided fresh evidence of the need to shift gears on tax policies and government funding.
"It doesn't take Warren Buffett to see we're in an economic crisis," Doll said. "We need an economic policy that pays the bills. Where I live, they're conservative people. But they know there's a cost to doing business. It's time to throw the politics out and do what is right."
