Kansas’ April revenue collections miss mark by $65M, complicating budget debate

Kansas revenues miss April estimate by $65M

TOPEKA, Kan. — April’s Kansas revenue collections missed estimates by $65.3 million, officials said Friday, further challenging the Republican-controlled Legislature and Democratic Gov. Mark Parkinson who must balance the state budget.

Individual income taxes were off by about $74.7 million, a reflection of continued weakness in the Kansas job market. The state unemployment rate was 6.9 percent in March, the most recent figure available.

The Department of Revenue said the state took in $575.8 million in April, compared with a forecast of $641.1 million. The new target number was set by a group of economists and researchers on April 16, the day after 2009 taxes were due.

Parkinson said in a statement that the figures were “disappointing, but not surprising.”

“We can still manage to get through the current fiscal year without additional cuts,” Parkinson said.

The news came the same day the Senate Ways and Means Committee endorsed a $434 million tax package, of which $417 million is earmarked to cover a projected revenue shortfall in the 2011 budget. The amount included closing a $93 million shortfall in the current budget, not counting the April revenue report.

Senate Minority Leader Anthony Hensley said the report underscored the soft Kansas economy, but noted that individual income tax collections were about the same as April 2009. That suggests to him that the economy may be stabilizing.

“There is a silver lining in everything. You just have to look for it,” said Hensley, a Topeka Democrat.

A grim-faced Senate Majority Leader Derek Schmidt said he’s not sure the Senate will go ahead with plans to debate taxes and the budget Tuesday.

“My instinct at this point is that we just have to start voting,” said Schmidt, an Independence Republican.

House Speaker Mike O’Neal, a Hutchinson Republican, said he and other GOP leaders will decide Monday morning whether to have that day’s debate on a proposed $13 billion budget.

But he said the new numbers support the House’s approach of trying to avoid tax increases, which GOP leaders believe will slow any economic recovery.

The Senate tax package includes $21 million set aside for the Kansas Department of Transportation. It also includes increasing the sales tax rebate for low-income Kansas residents for food purchases.

“I don’t for a minute think that it’s the final product,” Senate Ways and Means Committee Chairman Jay Emler, a Lindsborg Republican, said of the budget. “You have to have something to start debating on the floor.”

Legislative staff project a $93 million gap in the 2010 budget, growing to $325 million in 2011. The tax package is aimed at closing the entire shortfall.

The committee wants to raise the state’s 5.3 percent sales tax to 6.3 percent and increase the cigarette tax by 55 cents a pack to $1.34. The plan also would eliminate an existing income tax break for manufacturers.

Senators largely followed the same revenue proposal outlined by Parkinson in January. They avoided deeper cuts to education and social services.

Emler said additional cuts could have been considered, but all of them had ramifications for Kansas residents that were too painful to consider, such as reducing the amount for home- and community-based services for the disabled.

“I don’t think that anyone is getting fatter or richer off this budget,” Emler said.

Democrats had been hoping that the revenue plan would include raising income tax by creating new brackets for higher earners.

“I think this is a good starting point,” Hensley said. “You have to have a two-house strategy. It has to stand a chance to pass in the House, and I’m not sure this has a chance to do that.”

The House budget relies on further cuts in state spending, the transfer of dollars from various state programs and some federal money. It would reduce public education spending by $86 million but wouldn’t require most school districts to raise taxes.

On the Net:

Kansas Legislature: www.kslegislature.org