05 May 2021 | Tax and budget

On the heels of revised estimates, revenue up for April

Emily Fetsch
May 5, 2021

Last month, the Consensus Revenue Estimating Group offered positive predictions for the next year, noting a “broad expectation that the worst of the pandemic and associated economic downturn are behind us.” On May 1, the monthly State General Fund Revenue Receipt Update was released, the first time since the estimating group re-evaluated Kansas’ economic situation.

Estimated revenue for April was $933.75 million, and the actual revenue brought in was $1.03 billion. This is much better than April of last year, when COVID-19 insecurity gripped the state. In April 2020, the actual revenue brought in was just $645.27 million.

However, Kansas isn’t doing quite as well as it was in 2019. April 2019 revenue receipts totaled $1.28 billion, more than $630 million over April 2020 and more than $246 million above April of this year.

Last year, Tax Day was moved from April 15 to July 15, and the change meant a portion of revenue previously anticipated for April 2020 was instead received in the coming months and into the 2021 fiscal year. This year Tax Day was moved from April 15 to May 17, shifting some revenue coming in by a month, but keeping it in current fiscal year.

The Consensus Revenue Estimating Group met to project the State General Fund revenues for the next two years on April 20. The group includes the budget director, staff from the Division of the Budget, the director of legislative research, staff from legislative research, staff from the Kansas Department of Transportation, and three economists from state universities.  

The estimating group included analysis of several tax changes at the federal level that could impact the state’s tax treatment as well. Federal changes that impacted the state include:

  • The Paycheck Protection Program (PPP),
  • Exemption of the first $10,200 of unemployment benefits in tax year 2020,
  • Expanding the federal Child and Dependent Care Tax Credit,
  • Expanding the federal Earned Income Tax Credit,
  • Temporarily allowing all business meals to fully be deducted, and
  • Changing certain rules related to charitable deductions.

According to the Kansas Department of Revenue, the state could lose more than $100 million in revenue from these federal changes in fiscal year 2021 and more than $280 million in fiscal year 2022.  The bulk of the cost of the federal changes are related to the PPP loans, reducing revenue to the State General Fund by $52.1 million in FY 2021 and $209.5 million in FY 2022.

While the new revenue estimates and the April monthly receipts indicate Kansas is recovering, continued caution is needed to ensure the state will have the revenue needed in fiscal years 2023, 2024, and beyond. The current positive projection is not substantial and should not encourage lawmakers to make short-sighted decisions that create fiscal peril. Legislators should be optimistic but cautious, and they should continue to make investments needed to strengthen Kansas for the future.

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