Politics & Government

Kansas sales tax receipts lag expectations in August report

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Kansas sales tax receipts were up in August but still fell $3.2 million short of expectations, officials said at a Capitol briefing Tuesday.

Use taxes came in $2.4 million higher than expected.

But seriously souring the revenue picture, the state paid out $22.3 million in “unanticipated” income tax refunds for August.

Revenue Secretary Nick Jordan called that hit mostly a timing issue. Some corporate refunds and credits are unanticipated, he said, in that it’s left to companies to decide when to claim them.

Those refunds plus other decreases sank August revenue to more than $30 million below expectations. The shortfall was offset by budget adjustments announced last month, bringing the shortfall to about $6 million.

Overall for the fiscal year, which so far includes July and August, the state is $10.8 million below its expected revenue of $834 million, or off by 1.3 percent.

The overall revenue number included sources officials hadn’t included in past Revenue Department reports, such items as insurance premiums, interest and agency earnings.

The August report reflects sales tax collections in July, the first month of the state’s new sales tax rate. Lawmakers increased the rate from 6.15 to 6.5 percent last session to plug a budget hole.

Budget problems occurred after the Legislature cut income taxes to stimulate the state economy. Earlier this summer, Budget Director Shawn Sullivan outlined $63 million in budget adjustments to help create a small surplus.

Jordan said that although sales taxes were below expectations, sales and use taxes showed “nice, healthy increases.” Sales tax receipts showed 3.9 percent growth, he said. And income tax withholding in the month was up 6.7 percent.

“There’s just a lot of positive signs in this,” he said.

Cigarette taxes, which lawmakers also increased last session, were up about 53 percent.

Of the $22 million in refunds, about $14 million was a corporate income tax credit that went to a company for its investment in its facilities in the state. Officials would not name the company.

The added revenue sources in the report create a more complete financial picture, Sullivan said, but the Revenue Department’s tax receipt numbers are the figures to watch.

“In my opinion that is still the most important factor to look at,” he said.

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