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10 April 2024 | Tax and Budget

FY 2024 Kansas Revenue Tracker

Each month, the Kansas Division of the Budget reports how much tax revenue the state collected for the previous month. Forecasts are released by the Consensus Revenue Estimating Group twice a year, which actual monthly collections are then compared to. These forecasts help lawmakers understand how much total tax revenue they can expect to see in the state coffers, which in turn helps them develop the state’s budget for the cost of government services and operations for the upcoming fiscal year.

Read our explainer on how the state budget works.

KAC’s revenue tracker provides a visual snapshot of each monthly report and how the revenue side of the budget is being funded to achieve a balanced budget.

March 2024

Revenue highlights:

  • Actual collections for March 2024 were 0.9%, or $7.0 million, above the estimate for the month. This was 0.3% lower than the March 2023 collections.
  • To date, Kansas has collected 67.7% of the $10.19 billion in total expected tax revenue for the current fiscal year. This is 2.1% below cumulative collections in FY 2023.
  • Collections for the fiscal year to date (July 2023 through March 2024) are now about 2.0% lower than what was expected.

For additional details, see the March State General Fund Revenue Receipt update.

Big Picture Takeaway — A Minimal Uptick

For the first time in five months, revenues exceeded expectations. In March 2024, revenues were largely driven by higher-than-anticipated income taxes, while sales taxes took a dip below what the state predicted.

Though modest, this increase has moved us closer to the expected revenue intake for the year. This furthers our belief that revenues are on a path back to normal compared to the last few years of higher-than-expected revenues that resulted in historic surpluses.

While the recent tax plan in Senate Sub. for HB 2036 passed to the Governor will provide tax relief to all Kansans (if she signs the bill or lets it become law without her signature), the Consensus Revenue Estimating Group will have to readjust expectations for state revenues. This is particularly true for future income taxes, which are likely to have lower collections due to changes to the structure of the existing income tax brackets, lowering the rates of the remaining two brackets, significant increases to the personal and dependency exemptions, the elimination of income tax on all social security retirement income, and slight increases to the standard deduction.

February 2024

Revenue highlights:

  • Actual collections for February 2024 were 6.0%, or $33.1 million, below the estimate for the month. This was 5.2% lower than the February 2023 collections.
  • To date, Kansas has collected 60.3% of the $10.19 billion in total expected tax revenue for the current fiscal year. This is 2.0% below cumulative collections in FY 2023.
  • Collections for the fiscal year to date (July 2023 through February 2024) are now about 2.4% lower than what was expected.

For additional details, see the February State General Fund Revenue Receipt update.

Big Picture Takeaway — Revenues Falling Further Each Month

Actual revenues are continuing to fall further from the state’s expectations. This is the fourth month in a row that actual revenues are lower than expected and the third month that revenue is lower than last year. Though, we believe this signals a return to normal revenues compared to the last few years of higher-than-expected revenues that resulted in historic surpluses.

While tax relief seems to be still on the table for Kansas families this session, lower revenues demonstrate the need to focus on cuts for low- and middle-income families. However, with individual income tax and sales tax leading the lower-than-expected collections, any expensive tax cuts could threaten our state’s financial stability. Moving forward, lawmakers must prioritize balancing the cost of a tax package benefiting the working class to protect our state budget.

January 2024

Revenue highlights:

  • Actual collections for January 2024 were 6.5%, or $64.1 million, below the estimate for the month. This was 11.3% lower than the January 2023 collections. 

  • To date, Kansas has collected 55.1% of the $10.19 billion in total expected tax revenue for the current fiscal year. This is 1.7% below cumulative collections in FY 2023. 

  • Collections for the fiscal year to date (July 2023 through January 2024) are now about 2.0% lower than what was expected. 

For additional details, see the January State General Fund Revenue Receipt update.  

Big Picture Takeaway — A Downward Pattern

Despite an anticipated revenue decrease between December and January, actual figures fell further behind both expectations and last year's revenues. This continues a downward trend of revenue collections, signifying a return to pre-pandemic revenues or overly optimistic revenue estimates.  

Either way, decisionmakers must remain vigilant in protecting collections from further deterioration. If lawmakers are set on passing tax relief this legislative session, targeting tax cuts for low- and middle-income Kansans will help families afford the necessities that they may be forced to forgo otherwise, churning money back into the Kansas economy and boosting our state’s budget.  

Lawmakers have plenty of options to channel part of the state’s budget surplus to Kansans who need it most without busting the state budget. Any large-scale tax cuts that jeopardize the state’s financial stability in the long run will throw us back into financial trouble that can be avoided.     

December 2023

Revenue highlights:

  • Actual collections for December 2023 were 3.4%, or $36.9 million, below the estimate for the month. This was 3.8% lower than the December 2022 collections.

  • To date, Kansas has collected 46.0% of the $10.19 billion in total expected tax revenue for the current fiscal year. This is 0.4% below cumulative collections in FY 2023.

  • Collections for the fiscal year to date (July 2023 through December 2023) are now about 1.1% lower than what was expected.

For additional details, see the December State General Fund Revenue Receipt update.

Big Picture Takeaway — A Path Toward Normalcy

Despite an anticipated revenue boost in December due to the holiday shopping season, actual figures fell behind both expectations and last year's revenues. However, lower-than-estimated revenues are not always a reason to assume the worst. A setback that puts the state only around 1% behind the total revenue estimate could be made up within a month or two of stronger collections.

Corporate taxes represented the most significant decline compared to estimates, with $39.2 million in decreased revenue. State officials said this was due to one less deposit day in December 2023 than in December 2022. However, this difference between actual and estimated revenues may signal optimistic estimates but a return to normal (pre-pandemic) collections.

November 2023

Revenue highlights:

  • Actual collections for November 2023 were 2.1%, or $13.8 million, below the estimate for the month. This was 1.1% higher than November 2022 collections.

  • To date, Kansas has collected 35.8% of the $10.28 billion in total expected revenue for the current fiscal year.

For additional details, see the November State General Fund Revenue Receipt update.

Big Picture Takeaway — Continued Declines in Revenues Should Give Lawmakers Caution for Upcoming Spending Plans

Overall decrease in the Consensus Revenue Estimating group’s revenue predictions:

  1. The Consensus Revenue Estimating group met on November 9 to revise the State General Fund revenue estimate for FY 2024 (the current fiscal year) and make the preliminary estimate for FY 2025.
    • The revised total estimate is $10.28 billion, down from the $10.35 billion previously estimated. This is a decrease of $67.7 million, or 0.7%, below the estimate released in April.
    • The FY 2025 total revenue estimate is $10.26 billion, which is $26.0 million, or 0.3%, below the revised FY 2024 figure.
    • The initial tax collections estimate for FY 2025 is $10.13 billion, which is $65.0 million, or 0.6%, below the revised FY 2024 tax estimate of $10.19 billion.
  2. The updated forecast retains concern for the overall economy, including prolonged elevated interest rates and high inflation.
    • Elevated levels of inflation may offset the strong growth of the Kansas economy.
    • Kansas job growth has been consistent over the past nine months, and the Kansas unemployment rate is expected to increase from 2.7% in 2022 to 2.9% in 2023. However, the national unemployment rate (3.8%) is expected to stay above the Kansas rate.
  3. Taxes.
    • Individual income tax receipts were about $93.0 million, or 2.0%, below the FY 2023 estimate, and were $97.5 million behind the prior FY 2024 estimate through October 2023. The reduction is a result of the SALT Parity Act.
    • Corporate income tax receipts exceeded the FY 2023 estimate by $129.6 million. This estimate for FY 2024 includes a 0.5% reduction due to the APEX agreement.
    • The new estimate of receipts calls for a 0.6% decline for the total fiscal year, primarily due to the state sales tax on food and food ingredients further decreasing from 4.0% to 2.0% on January 1, 2024. The final reduction of the state food sales tax rate will occur in January 2025, which is included in the estimated FY 2025 retail sales tax revenue of $2.61 billion.

So, what does this mean for our state? Revenue forecasts are steadily trending down after nearly three years of high projections. In the context of the bigger fiscal picture, things are normalizing to a post-pandemic world. Neither the Governor’s Office nor the Division of Budget appear to be worried yet, and that is probably because the state is expected to have a $2.7 billion surplus by the end of the fiscal year, along with more than $1 billion in the state’s rainy day fund.

With the 2024 legislative session just around the corner, there are endless ideas floating around about how to spend the multi-billion-dollar surplus — including a one-time tax rebate or restructuring risky tax plans that were proposed last session. But there is a pressing need for quality, affordable child care, full investment in special education, accessible health care, and improving families’ economic security. These items should be at the top of the list for spending plans to make a difference in the lives of Kansas’ children and families.

October 2023

Revenue highlights:

  • Total tax collections for October 2023 were $29 million below the estimate, or 4.1%. This was 7.4% lower than the October 2022 actual collections.
  • Individual income tax collections continued to struggle, coming in 14.7% short, as tax refunds resulting from the SALT Parity Act reduced receipts.
  • Corporate income tax collections, which increase by a proportionate amount to the decrease in individual tax revenue due to SALT business tax filing changes, were 91.7% above the estimate.
  • Collections for the fiscal year to date (July 2023 through October 2023) are now about 0.1% lower than what was expected.
  • As of October 31, 2023, Kansas had collected about 29.2% of the $10.3 billion in total budgeted revenue for the current fiscal year. This same time last year, about 31.7% of the total budgeted amount had already been collected.

For additional details, see the August State General Fund Revenue Receipt update.

Big Picture Takeaway — Bumpy Revenues Going into the Holiday Months

Although the first four months of FY 2024 revenues have been more volatile than expected, they still make up just one-third of the entire revenue window; many other variables factor into the analysis of trends and formation of estimates. Also, November is an important month for state revenue watchers for a few reasons:

  1. October was the filing deadline for individual income tax filers who received an extension. Now, all receipts for the 2022 tax year (including those for the SALT Parity Act, which changed how pass-through entities are taxed) have been fully reconciled. The CRE group will now be able to see the broader impact of the Act on the whole tax year and how that can be accounted for moving forward. That said, individual and corporation income tax estimates will likely be adjusted to better reflect the offsetting effect of the Act on both categories.
  2. The holiday shopping season historically begins on “Black Friday,” but retailers have started releasing holiday deals much earlier in the month (Walmart, Target, and Best Buy started theirs this week), so there will likely be an increase in sales and use taxes this month and in the coming months… perhaps enough to help stabilize year-to-date revenues.
  3. The Consensus Revenue Estimating group met on November 9 to revise the State General Fund revenue estimate for FY 2024 (the current fiscal year) and make the preliminary estimate for FY 2025, which will serve as the basis for the annual state budget. More details about the economic and fiscal factors that were considered will be released later this month. But from the preliminary memo, we know the following:
    • The FY 2024 estimate decreased by $67.7 million, or 0.7% below the estimate in April, with total taxes making up $65.0 million of that and other revenues the remaining $2.7 million. The revised total tax estimate is $10.19 billion compared to the previous $10.26 billion.
    • The FY 2025 total tax estimate is $10.13 billion, which is $64.8 million, or 0.6 %, below the newly revised FY 2024 figure.

Read our explainer on how revenue forecasting works.

September 2023

Revenue highlights: 

  • Actual collections for September 2023 were 4.4%, or $42 million, above the estimate for the month and 3.2% higher than September 2022.   
  • Collections for the fiscal year to date (July 2023 through September 2023) are now about 1.4% lower than what was expected. 
  • As of September 30, 2023, Kansas had collected about 22.5% of the $10.3 billion in total budgeted revenue for the current fiscal year and is on track to reach the target by the end of the fiscal year.

For additional details, read the Governor’s Office press release on September revenue collections.  

Big Picture Takeaway — Revenues Looking Up

After a notable dip in revenues last month, the state is back on track to meet estimates for the year, including the projected $2.6 billion surplus. As part of the overall budget process, the estimate for FY 2024 could be adjusted at the November Consensus Revenue Estimating meeting, though this September revenue upswing makes that less likely. What will definitely happen at the November meeting will be the setting of estimates to guide requests included in the FY 2025 Governor’s Budget Recommendations. State agencies are working with the Kansas Division of Budget to develop requests and monitoring meaningful revenue and economic trends that could impact agency budgets.  

Check where we’re at in the state budget cycle here.  

August 2023

Revenue highlights: 

  • Actual collections for August 2023 were 3.7%, or $24.4 million, below the estimate for the month and 1.9% lower than August 2022.    
  • Collections for the first two months of the new fiscal year are now about 0.8%, or $10.6 million, lower than what was expected.  
  • To date, Kansas has collected 12.9% of the $10.3 billion in total expected revenue for the current fiscal year. 

For additional details, see the August State General Fund Revenue Receipt update.

Big Picture Takeaway — Keep Calm and Carry On

Lower-than-estimated revenues are not always a reason to assume the worst. A revenue setback that only puts the state less than 1 percent behind the cumulative estimate this early in the fiscal year can easily be made up within a month or two of stronger revenues. Though there are many possible policy solutions to improve the state tax system, the fact that Kansas does not rely on only one tax source absorbs some of the impact of revenue fluctuations throughout the year, allowing for more accurate forecasting and fiscal planning.

July 2023

Revenue highlights:

  • July revenue marks the start of the 2024 fiscal year and another month of strong collections.

  • Actual collections were $13.9 million, or 2.1%, higher than estimated.  

  • Collections from July 2023 were $94.7 million, or 16.2 %, higher than July 2022.

  • With this first month of collections, Kansas has collected about 6.6% of the $10.3 billion in total budgeted revenue for FY 2024.

For additional details, read the Governor’s Office press release on July revenue collections. 

Big Picture Takeaway — New Fiscal Year Buzz and Upcoming Checkpoints

The start of a new fiscal year brings not only nervous hope for the upcoming year’s revenue to meet the estimated budget, but also a guarded realization that unforeseen events in Kansas, across the nation, or even across the world could change the fiscal picture at any time. Although the first few months of the new fiscal year typically are strong revenue months (as reported quarterly income tax withholdings are reflected in individual income tax receipts and back-to-school shopping lifts sales tax receipts for an early boost), knowing that the state has a healthy rainy day fund and a surplus from FY 2023 provides some relief that only preparedness can provide.

Additionally, because the budget cycle never ends, the start of the fiscal year is also the start of the budget planning process for upcoming fiscal year 2025. In July, agencies receive guidance from the Department of Budget to begin forming recommendations and requests to fund the programs and services that impact our daily lives. In the coming months, agencies will be receiving input from legislative committees, staff, service providers, advocates, and the public to finalize priorities and ultimately decide what will be submitted to the Governor’s Office for inclusion in the Governor’s Budget Report – the formal proposed budget to the Legislature that serves as the starting point of the FY 2025 budget.

You can learn more about key budget process checkpoints and when/how you can get involved here.

We will be following the entire process with analyses and educational materials to help boost your knowledge (and confidence) about the budget and the important role it serves in the lives and quality of life of all Kansas children and families. Follow along on our State Budget page!

Our monthly FY 2023 revenue analyses can be found here.

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