The monthly reports released by the Kansas Department of Revenue are curious documents to examine. Secretary Nick Jordan will offer the briefest of snapshots regarding how well state coffers are being filled compared to budget, then usually offer a one- or two-sentence explanation of what he considers most important.
Tuesday’s release was a little different than usual. Instead of reporting just the amounts collected by Revenue, Jordan has been instructed by the governor to include all other departments’ contributions. The result was the secretary only had to explain an overall shortfall of $6.4 million for the month instead of the $25 million deficit in tax collections.
“The state paid out $22.3 million in unanticipated refunds in the corporate and individuals income tax categories for August, which brought down the overall total,” Jordan said in the latest release.
It’s always something.
In July, tax collections were down 0.9 percent so the report focused on corporate and individual income taxes surpassing expectations. In June, revenue was down $22.5 million to budget, so Jordan focused on improvement from the year before. May’s numbers were $5.8 million below budget so he discussed individual income tax receipts being up. In April, the $4.4 million overall shortfall was paired with sales tax receipts beating budget. In March, the focus was individual income tax receipts being up although overall receipts missed by $11.2 million.
As you can see, it has been six straight months since the state has been able to make budget. That’s even with a revision made in April by the Consensus Revenue Estimating group, usually a reliable predictor of revenues.
As pointed out by the Kansas Center for Economic Growth, the panel generally is pretty close. Comprised of experts from the Kansas Division of Budget, the Department of Revenue and the Legislative Research Department as well as economists from KU, K-State and Wichita State, overall the CRE group was within 0.2 percent of actual revenues from 1975 to 2013.
Fiscal year 2014, the first full year when the massive income tax cuts sought by Gov. Sam Brownback and passed by the Legislature showed their full effect, the CRE estimate was off a record 5.6 percent. FY15 was only down 1 percent, but that was only after two rounds of serious downward revisions during the year.
The flaw is not to be found with the revenue estimators, but the unknown effects the state put in motion with the tax cuts of 2012 and ’13. The governor had promised it would be a shot of adrenaline. Instead, it’s proven to be a slow toxic drip of bad news.
There is nothing surprising about negative budget performance, increasing deficits, downgraded credit ratings, expense cuts, historic tax increases designed to backfill budget hoes, and the like. All were predicted by those not beholden to the governor.
We just wish those in the Brownback administration would stop acting surprised every month the numbers look bad.
Editorial by Patrick Lowry