As digital sales surge, state revenue ahead of predictions for August

Individual income and corporate taxes were above estimates (an additional $31.0 million and $2.3 million, respectively). In addition, individual income and corporate taxes were higher than last August. This August, individual income taxes brought in $271.0 million, compared with last August’s $231.3 million. Similarly, corporate taxes brought in $7.3 million this August, compared with last August’s $6.6 million. However, this fluctuation is likely attributable to the tax deadline of July 15, extended because of the pandemic.

Like last month, sales tax revenue has outpaced estimates, particularly compensating use taxes (out-of-state purchases). As Kansans continue to increase online purchases during the pandemic, compensating use taxes exceeded estimates by more than $9.3 million. Last month (July) this revenue exceeded estimates by $14.3 million.

If bills about digital goods and marketplace facilitators had been passed last legislative session, Kansas would have brought in even more revenue brought in from online, out-of-state purchases. These two changes would even the playing field between online retailers and their Kansas-located, brick and mortar counterparts. When the Legislature returns in January, Kansas Action for Children encourages lawmakers to revisit both proposals.

While these revenue numbers are a step in the right direction, the state is still predicted to experience an overall decline in revenue for Fiscal Year 2021. The needed response to a budget shortfall is clear. Budget cuts would worsen the current economic downturn by harming crucial state services. Instead, Kansas must identify new revenue in order to address this current crisis, in addition to investing in our communities’ well-being.