FY 2023 Kansas Revenue Tracker
Each month, the Kansas Division of the Budget reports how much tax revenue the state collected for the previous month. These actual collections are compared to the forecasts produced by the Consensus Revenue Estimating Group, which help the Legislature understand and plan for the cost of providing services and operating the state government as legislators develop the state’s budget for the upcoming fiscal year.
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.
April 2023
Revenue highlights:
- Actual collections for April 2023 were 2.3%, or $30.1 million, below the estimate for the month and 14.7% lower than April 2022.
- Collections for the fiscal year to date (July 2022 through April 2023) are now about 0.4% lower than what was expected.
- Lower-than-projected collections, especially compared to April last year, are due to a combination of factors, including raised estimates from the April Consensus Revenue Estimate, lost revenue from the decreased sales tax on food and food ingredients, and changes to individual and corporate tax filings according to the SALT Parity Act.
- As of April 30, 2023, Kansas had collected 82% of the $10.13 billion in total expected revenue for the current fiscal year.
For additional details, see the April State General Fund Revenue Receipt Update.
Big Picture Takeaway — New Revenue Forecast Released
The April Consensus Revenue Estimate was released on April 20 with revenue projections for the rest of FY 2023 and for FY 2024. For the budget to be balanced, as required by the Kansas Constitution, revenues must exceed planned expenditures in the state’s budget and all other approved expenditures from new legislation.
Overall, changes from the last estimate in November 2022 were small but showed increases in revenues for both years and modest trends of growth for the Kansas economy. The new estimate raises FY 2023 tax collections by $75.4 million and combined revenue receipts by $128.2 million above the November estimate, for a total of $9.8 billion. For FY 2024, the forecast was increased by $109.3 million for a total of $10.2 billion.
In recent forecasts, rising inflation has been a concern and remains so, albeit with slight improvements leading to modest growth for the state economy. Inflation is expected to continue to decrease in 2023 and 2024 but will likely still be above the federal government’s target level.
While April revenues missed the mark, this does not exactly spell trouble for the state. The new estimate shows the state ending with surpluses this year and next of $1.9 billion and $3.0 billion, respectively, as well as a rainy day fund balance of $1.6 billion by the end of FY 2024. Lower revenues in the last few months of FY 2023 may slightly decrease the surplus but will not completely erase the immense gains of the past nine months. Additionally, the replenished emergency reserve provides additional assurance against an unforeseen fiscal catastrophe.
An updated CRE will be released in June, which will include the fiscal impact of all legislation becoming law during the upcoming FY 2024, particularly revenue decreases expected as a result of potential new tax law changes.
March 2023
Revenue highlights:
- Actual collections for March 2023 were 9.4% higher than estimated.
- Estimates incorporate the expected decrease in revenue due to the reduction of state sales tax on food and food ingredients, in effect since January 1, 2023, which has resulted in 0.7 % lower sales and use tax collections this March compared to March 2022.
- Collections from July 2022 through March 2023 were about $262 million (or 3.9%) higher than what was expected for the time period.
- As of March 31, 2023, Kansas had collected just under 70% of the $10.1 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 March revenue collections.
Big Picture Takeaway
- The Consensus Revenue Estimate meeting scheduled for April 20th will be pivotal in determining if the high revenue collections of the last two years will be enough to soften the blow to revenue from several tax changes approved by the 2023 Legislature. Despite additional investment into the state rainy day fund, significant revenue losses are expected, especially if the new $500 million+ tax package containing the regressive flat tax becomes law.
February 2023
Revenue highlights:
- Actual collections for February 2023 were about 7.2% higher than estimated.
- Collections from July 2022 through February 2023 were about $197 million (or 3.2%) higher than what was expected for the time period.
- As of February 28, 2023, Kansas had collected about 62% of the $10.1 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 February revenue collections.
Big Picture Takeaways
- The overall state economy is doing fine, but Kansas families are still experiencing high inflation for necessities like food, energy, and health care. The Governor and Legislature appear determined to cut taxes, but disagree on where and how the trim should happen. Permanent reductions, such as a proposed flat tax, might sound appealing right now as revenues are high, but the funding cushion provided by federal pandemic relief will run out soon, and costs that have been covered by federal grants for the last three years will once again be the responsibility of the state. Any tax changes must ensure that lower-income families do not continue to pay proportionally more in taxes while also seeing the programs and services they rely on to make ends meet drastically underfunded.
- A recession is still a possibility. Federal monetary policy, inflation, and tense global relations could push the national economy into a recession, which would reduce the consumer spending that drives the economy. The resulting revenue shortfall would be catastrophic for states and for residents relying on government services. Fortunately, Kansas now has close to $1 billion saved in the rainy day fund for just that reason, but that can only last so long – close to 40 days of operation.
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