The state’s budget director downplayed the significance of last month’s poor tax revenue and affirmed that the administration does not plan budget cuts.
The state missed tax revenue estimates by nearly $32 million last month. Tax revenue is below expectations by $61 million for the fiscal year, which began in July.
That has partially been offset by non-tax revenue that has exceeded expectations. The state remains about $42.5 million off pace of projections for the year, and it had projected to have about $78 million in cash reserves by the end of June.
This has raised concern that the state may need to make budget cuts after a series of cuts in the past year and that lawmakers may need to pass another tax increase after passing one this year during the longest session in the state’s history.
However, Gov. Sam Brownback said this week that he does not expect to raise taxes in the coming session and does not plan to cut the budget in the near future.
“Receipts looked OK the first two months,” said Shawn Sullivan, the governor’s budget director, in a hallway of the Capitol on Thursday. “We just have to see whether those September receipts were a trend or an anomaly.”
Patrick Miller, a political scientist at the University of Kansas, noted that September is the seventh month in a row that the state has missed revenue estimates and that the only month it beat expectations in the past year was February 2015.
July through September are the first three months since the Legislature increased the sales tax rate to 6.5 percent from 6.15 percent and approved a number of other tax changes meant to stabilize the budget.
Annie McKay, executive director of the Kansas Center for Economic Growth, a liberal-leaning think tank that has criticized the governor’s tax policies, said there is already a clear trend that revenues have been poor for several years.
She compared the administration’s handling of the budget to watching a house burn down and hoping for rain. “It’s just crazy to me that the fire rages on and we’re seeing blue skies and saying, well, we think it might rain, so let’s just sit this one out,” she said.
Sullivan would not say what budget moves the administration would take if September’s revenue represents a trend or if the governor would consider sweeping money from the highway fund as he did last year.
The state is offering amnesty from penalties to people who owe back taxes through Oct. 15 in an effort to draw in revenue. The move is estimated to bring in about $30 million. Jeannine Koranda, a spokeswoman for the Revenue Department, said a “steady stream” of people have sought amnesty but that the department would not have final numbers until November.