Kansas Revenues Dip, Widening Expected Budget Gap

DALLAS — Kansas tax collections totaled $489 million in December, leaving all revenues $22 million shy of official expectations for the first six months of fiscal 2011.

The Department of Revenue said the December tally of $488.9 million was $25.6 million more than the amount recorded during the same month a year ago, but $22.2 million less than predicted in the latest revenue estimate.

The $2.64 billion collected in the first half of the current fiscal year represents 48.3% of the $5.47 billion the state expects to collect in fiscal 2011. The revenue estimate for the current fiscal year, which was revised in November, forecast December revenues of $511 million — $22 million more than was actually generated.

The drop-off in collections last month was partly due to disappointing results from the corporate income tax, which generated $30 million instead of the expected $60 million.

An aide to Sam Brownback reiterated the newly elected Republican governor’s position that no new taxes will be needed to balance the fiscal 2012 budget. Spokeswoman Sherriene Jones-Sontag said the disappointing revenue numbers illustrate the volatility of the Kansas economy.

“Expanding businesses and getting more Kansans working again will strengthen our state’s economy and stabilize revenues so we can fund our state’s core responsibilities,” she said. Brownback will be sworn in as governor Jan. 10, when the Legislature convenes in Topeka for the 2011 session.

The official Consensus Estimating Group reported in November that the state was facing a $500 million revenue shortfall in fiscal 2012. The unexpected drop in December revenue will make that even larger.

The latest revenue projection by the panel of state budget experts and university economists put fiscal 2012 total receipts at $5.81 billion, up slightly from an estimated $5.79 billion in fiscal 2011.

However, expenditures in the next fiscal year are estimated at $6.2 billion — based on current spending levels — expected increases in Medicaid and other social programs, and a $60 million shortfall at the end of fiscal 2011. Before December’s drop, revenue collections for fiscal 2011 almost matched the group’s projections. Kansas starts its fiscal year July 1.

The individual income tax brought in $1.25 billion during the first six months of the fiscal year, which is slightly more than expected and 8% more than the same period of fiscal 2012, according to the Revenue Department. The tax is expected to generate $2.58 billion in fiscal 2011.

Retail sales tax collections through December total $980 million, slightly less than half the $2 billion expected in fiscal 2011. The total is 16% more than the same period of fiscal 2010 and is being bolstered by higher sales, which rose to a 6.3% rate from a previous 5.3% when the fiscal year began.

The latest survey of regional business conditions by economics professor Ernie Goss of Creighton University said Kansas’s economic strength fell to 48.4 in December from 50.8 in November. A score of 50 on the 100-point Business Conditions Index is considered growth-neutral.

The state has not replaced manufacturing jobs lost since the recession began, Goss said, and job growth will be minimal in the first half of 2012. December’s index for the nine-state region was 57.5, up from 55.9 in November.

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