October 03, 2016 - 4:24 PM
TOPEKA, Kan. - Kansas collected nearly $45 million less in taxes than expected in September, complicating the state's budget picture five weeks before an election in which Republican Gov. Sam Brownback's fiscal policies are a major issue in legislative races.
The state Department of Revenue reported Monday that tax collections were $521 million, or 7.9 per cent short of the official projection of $566 million. It's the fifth consecutive month Kansas has missed its revenue targets; the state faces at least a small shortfall in its current $15.5 billion budget and potential spending cuts for the next fiscal year beginning in July 2017.
Brownback and his top aides blame disappointing tax collections on slumps in parts of the economy that affect many states, including agriculture and energy production. But Kansas also has struggled to meet its revenue targets and balance its budget since GOP legislators slashed personal income taxes in 2012 and 2013 at Brownback's urging as an economic stimulus.
The governor is term-limited, but his political allies face a potential backlash. Fourteen GOP conservatives lost their seats in the August primary, and Democrats hope to cut into Republican supermajorities in both chambers in the Nov. 8 election. If they do, they and GOP moderates could form governing coalitions that attempt to roll back key Brownback tax policies.
"Constituents, you know, they know our budget's unstable," said state Sen. Jim Denning, an Overland Park Republican who initially supported the tax cuts but has since criticized the governor. "The Brownback headwind is real."
Since the current budget year began July 1, the state's tax collections have fallen a total of $68 million short of expectations, for a shortfall of 4.7 per cent. The state now faces a shortfall in its current budget of about $60 million, and the gap would grow if Kansas kept missing its revenue projections.
Collections of sales, corporate income and personal income taxes all fell short of expectations in September.
Steve Stotts, the Department of Revenue's taxation director, said sales tax revenues are softest in rural counties relying on agriculture and oil production, suggesting people there are pulling back on their buying because they're not sure about how much money they'll have.
Personal income tax collections exceeded the state's expectations in July and August, and even with September's drop-off are running ahead of last year's collections. A federal report last week said total personal income in Kansas grew 1.2 per cent from the first quarter of this year to the second quarter, better than the national figure.
"We've got kind of a mixed bag right now," Stotts said.
Brownback's critics continue to blame his fiscal policies, particularly one exempting more than 330,000 farmers and business owners from paying personal income taxes.
Tax collections have fallen short of expectations in 32 of the 45 months — or 71 per cent of the time — since the first income tax reductions championed by Brownback took effect in January 2013. Brownback's budget director is having a news conference Tuesday to outline proposals he says will make revenue projections more accurate.
"The two things, it seems like, where the state has consistently had difficulty making projections on, is No. 1, when you've got a recession and, two, when you've got major tax policy changes," Brownback told reporters during his last news conference.
But in the 45 months before the first Brownback-era tax cuts took effect, the state exceeded its monthly projections 24 times, even as it struggled with the aftermath of the Great Recession.
"Anybody who has a couple of brain cells in their head knows that it's not good politics to say anything good about Brownback," said Tucker Poling, a Prairie Village attorney and the Johnson County Democratic Party's vice chairman.
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News from © The Associated Press, 2016