AP News

Kansas taxes $18M less than anticipated in October


TOPEKA, Kan. (AP) — Kansas collected $18 million less in taxes than expected in October, but Republican Gov. Sam Brownback's administration said Thursday that the income tax cuts largely responsible for the shortfall also are boosting the economy.

The state took in almost $445 million in taxes during the month, but officials had projected collections of nearly $463 million, roughly 4 percent more. Since the current fiscal year began in July, taxes have fallen $27 million short of expectations, at about $1.81 billion, a shortfall of 1.5 percent.

The biggest reason is a shortfall in individual income tax collections, both for the month and the fiscal year so far. Not only are such collections running behind expectations, they're well below last year's collections. At Brownback's urging, the GOP-dominated Legislature approved massive personal income tax cuts in 2012 intended to stimulate economic activity and followed up with more tax changes this year.

The Department of Revenue released the tax collection figures Thursday. Its accompanying statement extolled the tax cuts but ignored the shortfalls in collections — and potential short-term budget implications. The statement was headlined, "Kansans keep more of their money through tax relief."

"We believe this is money that will be spent in the Kansas economy through business and personal purchases," Revenue Secretary Nick Jordan said in the statement.

Brownback is running for re-election next year, and the tax cuts will be a major issue. Critics contend the reductions are helping wealthy Kansans, particularly business owners, far more than poor and middle-class families and will starve public schools and social services of funds.

The state collected $187 million in personal income taxes in October, or 15 percent less than the official forecast for the month of $220 million. Also, collections for the fiscal year to date were $762 million, or $38 million less than the $800 million projected, a difference of 4.8 percent.

In October 2012, before the tax cuts were fully in effect, the state collected $226 million in individual income taxes, and the July-through-October figure was more than $936 million. Thus, for the current fiscal year to date, the state has collected nearly $175 million, or 19 percent less, than during the same period in 2012.

House Minority Leader Paul Davis, a Lawrence Democrat running against Brownback in the governor's race, said such shortfalls will lead to cuts in education and higher local property taxes as school boards try to compensate.

"Meanwhile, the jobs Governor Brownback promised are nowhere to be found," Davis said in a statement.

But Department of Revenue spokeswoman Jeanine Koranda said there's evidence the tax cuts are working as intended. She also said the agency attributes none of October's revenue shortfall to the partial shutdown of the federal government.

She said business owners who paid personal income taxes on their profits — and no longer do — received refunds of past overpayments. The department estimated them at $15 million in October.

Also, Koranda noted, revenues from the state's retail sales and compensating use taxes exceeded expectations, both for October and the fiscal year to date, suggesting stronger-than-expected sales of goods. The compensating use tax is paid by consumers on large items purchased outside Kansas.

"It's not like a recession, where money is just disappearing," Koranda said. "Money is going back into people's pockets."

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Follow John Hanna on Twitter at www.twitter.com/apjdhanna .


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