Kansas tax revenues $15M less than expected in December; corporate revenue shortfall blamed

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TOPEKA, Kansas — Kansas collected $15 million less in taxes than anticipated in December, potentially hindering efforts to close state budget shortfalls and generating more debate about aggressive tax cuts engineered by Republican Gov. Sam Brownback.

But the state Department of Revenue said Wednesday that the month's disappointing figures resulted from volatile corporate income tax collections, which fell significantly short of expectations. Brownback concentrated efforts in 2012 and 2013 to boost the state's economy on cutting personal income taxes.

The department said the state collected $553 million in taxes during the month when it expected to take in $568 million, a difference of 2.7 percent. Corporate income tax collections for the month were $56 million, nearly $20 million — or 26 percent — less than anticipated.

"We've always recognized that corporate income taxes are volatile and hard to predict," Revenue Secretary Nick Jordan said in a statement. "This month is evidence of that."

The department said tax collections since the current fiscal year began July 1 were $2.73 billion — $12 million, or 0.4 percent short of expectations. Corporate income tax collections were also significantly short of expectations.

The agency's report capped a two-week stretch of unpleasant fiscal news for Kansas.

The state Department of Labor reported earlier this month that 4,400 fewer Kansans were employed in private-sector, non-farm jobs in November than in November 2013. And a three-judge Shawnee County District Court panel ruled Tuesday that state spending on public schools is inadequate under the Kansas Constitution and suggested annual aid to school districts needs to increase by at least $548 million.

The state faces projected budget shortfalls totaling $714 million through June 2016 following tax cuts that dropped the top personal income tax rate 26 percent and exempted the owners of 191,000 businesses from income taxes. Some GOP legislators have floated revenue-raising proposals, but their leaders are not enthusiastic about backtracking on Brownback's policies after lawmakers open their annual session Jan. 12.

"You've got the mad scientist still carrying on his experiment, with the same bad results," said Kansas Democratic Party Chairwoman Joan Wagnon, a former revenue secretary.

Wagnon said corporations may have restructured so their owners can avoid taxes. But she said it's also harder to make predictions about revenues because numerous changes under Brownback created "a destabilized tax system."

But Department of Revenue spokeswoman Jeannine Koranda said filings for 2013 from businesses whose owners received an income tax exemption are on track to be about the same or slightly lower than for 2012. She said federal tax laws prevent corporations from restructuring.

She also said corporations pay income taxes quarterly and adjust their projections of how much they'll owe between payments. Corporate income tax collections could bounce back in the spring.

"We're going to have a better picture when we get the next payments," she said.


Online:

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


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