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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

State's Tax Shortfall 'Not Looking Good'

January 03, 2009

Associated Press

TOPEKA - Kansas collected 7.2 percent less than anticipated in general tax revenue in December, a sign that its budget problems might not have hit bottom.

"It's obviously not looking good at all," incoming Senate Ways and Means Committee Chairman Jay Emler, R-Lindsborg, said Friday. "But I'm not surprised at all."

Legislative researchers already have projected the state will end its current fiscal year on June 30 with a $141 million budget deficit. They also say if the problems aren't addressed, the shortfall between anticipated revenue and current spending commitments will surpass $1 billion by June 30, 2010.

Preliminary figures from the Department of Revenue showed the state collected almost $482 million in general tax revenue in December. But financial forecasters had predicted more than $519 million in tax collections -- a difference of $38.6 million.

Revenue also fell short of expectations in November, just weeks after state officials and university economists issued the current fiscal forecast for state government.

Gov. Kathleen Sebelius and legislators must use the forecast in making budget decisions, but the latest numbers suggest the state's finances are in even worse shape than it shows.

Legislators convene Jan. 12, and the state's budget problems are considered their most pressing issue.

From the start of the fiscal year July 1 through Dec. 31, general tax collections were nearly $48 million short of expectations, at $2.6 billion.

"Based on the national trends, unfortunately, this is not a big surprise," said Sebelius spokeswoman Nicole Corcoran.

Corporate income tax revenue has been hit hard. For the fiscal year through Dec 31, it was nearly 13 percent short of expectations.

The forecast had suggested Kansas would collect $169 million in corporate income tax but took in only $147.5 million. The shortfall was $21.5 million, and most of it occurred in December.

In November, three major aircraft manufacturers in the Wichita area planned layoffs for their relatively well-paid work forces: Boeing Co., with 800, and Hawker Beechcraft and Cessna, with 500 each.

And in both October and November, the number of claims from Kansans who wanted to start collecting unemployment benefits was 67 percent higher than they were during those months in 2007.

Individual income tax collections, at $1.27 billion for the fiscal year through December, were 1 percent, or about $13 million, short of expectations. Emler predicted that trend also will continue.

Corcoran said the state will have a better picture of its finances after January. That's typically when retailers send the state the taxes they've collected on holiday sales and when some Kansans submit quarterly income tax payments.

"We'll be closely watching January numbers," she said.