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Last Updated: May 26th, 2010 - 17:07:52 |
TOPEKA, Kan. - A nearly 4 percent shortfall in Kansas tax revenues during December will increase pressure on Kansas legislators to either raise taxes or trim government spending even further, chairmen of two key tax committees predict.
The Kansas Department of Revenue reported late last week that December tax revenues for the state fell $18.3 million, or 3.8 percent, below projections for the month, to $463.2 million. The December results bring Kansas tax collections halfway through the state’s fiscal year to $2.4 billion, or $15.4 million below previously lowered projections for the year ending June 30.
Those previously lowered projections, which are for a 5.1 percent drop in revenues this year followed by another 2.3 percent slippage in 2011, already have prompted Kansas Gov. Mark Parkinson to make or request deep funding cuts for education, highway funding and many other state programs, and to dip into federal economic stimulus money the state originally hoped to save until 2011 or beyond.
Parkinson and other executive branch officials recently have suggested that raising state taxes on tobacco products and also reviewing previous tax cuts for business and consumers in boomier times.
Now, even after what may seem at first glance like a relatively mild shortfall in December, “the pressure to raise taxes will be immense,” state Rep. Richard Carlson, a St. Mary Republican and chairman of the House Taxation Committee, said Monday.
“We are caught between a rock and a hard place,” said state Sen. Jay Emler, a Lindsborg Republican and chairman of the Senate Ways and Means Committee.
Neither of the two lawmakers said they expect significant tax increases to be passed in the legislative session that begins Jan. 11.
“We need to remind ourselves that we are here to represent the people who pay those taxes,” Carlson said.
But short of streamlining state government somehow, neither legislator said they see much room for cutting spending much further either. Cutting educational funding, Kansas’ biggest budget expense, for example, any further would imperil the state’s eligibility for federal stimulus money for education, for example, Emler said.
“My guess is that is going to be a tough session,” he said.
Addressing tax issues in the upcoming legislative session may be further complicated by some diverging trends among Kansas’ three largest tax revenue streams.
Individual income tax collections in December, for example, fell nearly $33 million, or 14 percent, short of projections for the month and continue to run below expectations since July.
“That is really troubling, because individual income tax receipts account for about half of general fund receipts,” said Alan Conroy, director of the Kansas Legislative Research Department, which is the generally accepted arbiter of state revenue trends and projections.
Legislative Research analysts plan to release a more detailed analysis of the December numbers later this week. But in any case, it is difficult to predict income tax collections just now, because most Kansans, like other U.S. taxpayers, file the bulk of their returns between now and mid April, Conroy said.
December’s corporate income tax collections, in contrast, exceeded projections by $22.6 million, or more than 64 percent, totaling $57.6 million. At least some of that unexpected revenue, however, probably comes from some stepped up settlement activity that state legislators previously ordered to help resolve past corporate tax disputes, Conroy said.
Meantime, sales tax revenues, which are the general fund’s second largest income stream hit $145.5 million in December, just a 0.3 percent statistical wisp or $468,000, above projection.
Carlson said he hopes the higher than expected corporate taxes and nearly dead-on retail collections might be early signals of recession relief for the state.
For full story please see Friday's Times
© 2008 Southwest Times
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