Updated revenue numbers to provide more budget predictability
Friday, November 6th, 2015 @ 4:38PM
TOPEKA–Newly revised consensus revenue estimates position the legislature to operate with more realistic budget numbers for the 2016 session, House Leaders said Friday.
Revenue predictions revised from April estimates by the Consensus Revenue Estimating (CRE) group indicate that Kansas will take in $159 million less than predicted for the rest of FY 2016. Additionally, the CRE revised their April prediction for FY 2017 downward by $194.5 million. Subsequently, Governor Brownback announced $120 million in spending adjustments.
The state brought in over $124.6 million more this year than during the same time last year, despite a sluggish U.S. economy. Nationally, the economy expanded at an annualized 1.5 percent for the last quarter before September of 2015, which was below market expectations and considerably lower than the average 3.24 percent that the American economy grew between 1947 and 2015. According to the U.S. Census Bureau, national September retail sales came in lower than expected, and August sales were revised downward to reflect zero growth.
“The American economy is struggling and we’re seeing that here in Kansas,” said House Speaker Ray Merrick R-Stilwell. “The Governor recognizes that and made some difficult decisions today. I applaud the efficiencies he found”
Even though Kansans pay less in individual income tax than they did before 2012, income tax collections have grown since last year. The state brought in $21.8 million more in individual income tax from July-October 2015 than it did in the same time period during 2014. Meanwhile, the unemployment rate has remained historically low, well below 5 percent for over 18 months.
“It seems as though Kansans are choosing to save or pay down debt rather than spend, and that trend is showing up in sales tax collections,” said House Tax Chair Marvin Kleeb R-Overland Park.
Meanwhile, revenue collections in other states are also lagging. Total revenue in Oklahoma during the first quarter slid $16.9 million below the previous year’s collections, due in large part to falling energy prices. At the same time, oil & gas severance collections in Kansas are down almost 90 percent compared to last year, bringing in $3.1 million, compared with $31.3 million during the same time last year.
“These new revenue numbers make the 2016 session difficult but we have to be realistic and the fact is that the national economy isn’t doing as well as we would wish,” said House Tax Chair Marvin Kleeb R-Overland Park. “Nationally retail sales haven’t hit projections and that’s definitely hurting us. The Governor’s actions today are a necessary step to meet the fiscal challenges created by the stagnant national economy.”