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Kansas tax revenue falls below estimates, last year’s figures

  • The Wichita Eagle
  • Published Monday, June 30, 2014, at 4:48 p.m.
  • Updated Thursday, July 10, 2014, at 6:18 p.m.

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Kansas brought in $726 million less in tax revenue this fiscal year than last year, according to a report released Monday by the Department of Revenue.

That represents a year-to-year drop in revenue of nearly 12 percent for the state.

Some decrease had been projected because of tax law changes under the administration of Gov. Sam Brownback that started taking full effect this year.

But tax collections were still well below the projections, which had been adjusted for the changes in the tax code.

At Brownback’s urging, the Legislature reduced income tax rates and eliminated taxes on income derived from limited liability companies and other types of businesses that are organized to pass their profits straight through to the owners as personal income.

This year, actual state tax income is nearly $338 million less than the state’s economists predicted.

Tax revenue for June was down $41.7 million compared to the same month last year, $28 million below the estimated income.

Officials at the Department of Revenue could not be reached for comment.

In a recent interview, Brownback said that he thinks the depressed tax income will be temporary and will reverse when business owners spend their tax savings to grow their businesses and create jobs.

Brownback also said he doesn’t think he’ll need to make midyear budget adjustments to account for lower revenue, because the state carried a substantial reserve fund into this year.

Senate President Susan Wagle, R-Wichita and a Brownback confidante, blamed the shortfall on uncertainty over federal taxes and regulations.

She said in a statement that potential business investors “are either holding or folding their investment cards while they wait for more financial predictability in Washington.”

“When Kansans have confidence that federal leaders are taking steps to control debt and excessive regulation, they’ll go all in,” she added. “They will invest their dollars, and their ingenuity will boost this economy exponentially. Smart investors are getting ready for the turnaround, and they’re simply on hold in many ways until that happens.”

An economic adviser to Brownback’s Democratic opponent, Minority Leader Paul Davis of Lawrence, said the administration is trying to shift blame to where it doesn’t belong.

“When you miss the revenue projection by about $300 million, you think maybe you’d have the courage to say, ‘God, boy, that one caught us,’ ” said Gary Sherrer, a former Republican lieutenant governor and commerce secretary.

“And then, of course, you know they did the ‘Well, it was the Obama tax thing that did it,’ ” he added. “Let’s just say for a second you give them that. They knew about it. Are they so incompetent that even knowing that, they’re still $300 million off?”

In a brief news release accompanying the June report, Revenue Department public information officer Jeannine Koranda highlighted one of the few bright spots: Corporate income tax collections came in just short of $77.6 million, which is about $2.6 million higher than was projected. Corporate tax income in June was $8 million more than in June 2013.

But the higher-than-expected corporate tax revenue was nowhere near enough to offset lost revenue from personal income taxes, which came in nearly $25 million below the June estimate and $34.2 million below last year’s actual June income.

For the entire fiscal year, corporate income tax revenue is up about $28 million, and personal income tax revenue is down nearly $713 million.

Contributing: Bryan Lowry of The Eagle

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

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