The state of Kansas missed tax estimates for December by more than $35 million, putting the state’s coffers on pace to have less than zero in the current fiscal year, which ends in June.
The state was on pace to have about $5.6 million in the bank at the end of June after Gov. Sam Brownback ordered a series of budget cuts and transfers during the first week of November. But with December revenue falling short, the state is on pace to fall $14 million below zero, according to the state’s nonpartisan Legislative Research Department.
The primary cause of the December shortfall was individual income tax revenue, which came in nearly $26 million below expectations, or 11.3 percent off the mark. That’s 16.1 percent less than the state collected in December 2014.
“It is the first time this fiscal year that individual income tax receipts have not grown compared to the prior fiscal year to date,” said Secretary of Revenue Nick Jordan. “It is too soon to tell if this is a one-time event or not.”
Senate Minority Leader Anthony Hensley, D-Topeka, noted that the Brownback administration had celebrated the previous month when November revenue came in above expectations.
“They were ecstatic last month that we had turned the corner. But now it’s in reverse. It’s the same crisis that we’ve been in. … We turned the corner and fell into a manhole,” Hensley said.
Retail sales tax also fell short by nearly $14 million, or 7 percent, off of estimates for the month. Oil and gas severance taxes also fell short by a combined $1.3 million, or 11.1 percent.
One bright spot was a fee on insurance premiums, which generated $7.9 million, or 14.2 percent, more than expected.
For the fiscal year
Tax collections for the year are about $27 million below the estimates that the state’s economists made in November.
The governor’s office did not immediately respond to a question about whether the governor plans on making additional budget adjustments in the face of the December numbers. The governor could wait and see whether the state comes in above expectations in January.
Lawmakers return to Topeka on Monday for the start of the 2016 session, and the disappointing revenue for the month could renew a tax debate that many lawmakers had hoped to avoid this session.
“Obviously, it’s not the situation we’d prefer, but we will find solutions and ensure the state’s budget is balanced,” Rep. Ron Ryckman, R-Olathe, the House Appropriations Committee chairman, said in a message when asked about the potential impact to the state’s budget.
Even after righting the budget for the current fiscal year, the state faces a $170 million shortfall for the next year.
What it means
“It’s official. Kansas is broke,” House Minority Leader Tom Burroughs, D-Kansas City, said in an e-mail. “Given this month’s $28 million shortfall, the state is now $14 million in the red. Kansas cannot continue on this path. Our children need their schools to be adequately funded, our roads and bridges need to be maintained and repaired, and general government programs and services need to be properly funded.”
House Speaker Ray Merrick, R-Stilwell, said in an e-mail that the lower-than-expected sales tax revenue is “consistent with a national economy that continues to struggle under President Obama.”
“When the going gets tough, Kansas families pore over their household budgets,” Merrick continued. “That is why I am committed to an in-depth review of the state budget to ensure each tax dollar is being spent as effectively as possible.”