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Kansas tax collections fall $22M short of expectations in June, complicating tight budget


TOPEKA, Kansas — Kansas collected about $22 million less in taxes than anticipated this month, ending the fiscal year Tuesday with less of a cushion for its next budget, for which lawmakers boosted sales and cigarette taxes to keep it balanced.

The state took in a little more than $529 million in taxes in June, the state Department of Revenue reported, a 4.1 percent shortfall from the official prediction of more than $551 million.

For the entire 2015 fiscal year, the department reported tax collections of $5.5 billion — $33 million short of expectations, or about 0.6 percent short. That doesn't include taxes on insurance premiums, which were running about $3 million ahead of expectations through May.

Republican Gov. Sam Brownback and the GOP-dominated Legislature had expected the state to end its fiscal year with about $73 million in cash reserves. With those reserves and the $384 million in new tax increases, the state would retain about $36 million in reserves at the end of June 2016, keeping the budget narrowly balanced.

Lawmakers expected Brownback to trim the spending they approved for the next fiscal year by $50 million to boost those cash reserves. If state tax collections don't rebound, Brownback will face pressure to cut more deeply.

"This is an example of why we must be sure that tax dollars are being spent as effectively as possible," House Speaker Ray Merrick, a Stilwell Republican, said in a statement, also noting that lawmakers authorized a $3 million multiyear efficiency study of state government.

The state's budget problems arose after legislators slashed personal income taxes in 2012 and 2013 at Brownback's urging in an effort to stimulate the economy. Democrats have called the tax cuts a failed fiscal experiment.

"Until Brownback accepts responsibility and we change course, Kansas will continue to be on unstable financial ground," said House Minority Leader Tom Burroughs, a Kansas City Democrat.

In previous months, Department of Revenue officials noted that personal income tax collections were both growing compared with the previous fiscal year and running ahead of expectations. But personal income tax collections fell about $14 million short of expectations in June, leaving them slightly lower than anticipated for the entire fiscal year, at about $2.3 billion.

Spokeswoman Jeannine Koranda said the department doesn't yet have an explanation.

"Withholding taxes came in lower than expected," she said.

Sales tax collections, at $2.1 billion for the fiscal year, were about $17 million less than anticipated. Koranda said the Department of Revenue attributes the shortfall to a softer national economy.

The department also touted the year-to-year growth in total tax collections of 1.3 percent, or $70 million, for the just-completed fiscal year.


Kansas Department of Revenue: http://www.ksrevenue.org/

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