07 March 2022 | Tax and Budget

Solid State Revenues Continue to Shape State Budget Discussions

Karuva Kaseke

March 7, 2022

Yet again, state revenue collections outperformed projections in February. Tax collections brought in a total of $502.5 million, or 3.9%, above the estimate of $483.7 million. Retail and compensating use taxes are a combined $9.7 million, or 3.9%, above estimates, while income taxes are $10.7 million, or 5.3% higher. This robust performance raised the cumulative total for the 2022 fiscal year to just under $5.7 billion, which is 4.0% more than projected. 

As the Kansas legislative session marked its midpoint a few weeks ago with one major tax bill enacted and several others still pending, the strong revenue collections add to the fiscal landscape as lawmakers make appropriations for the upcoming year. KAC has been monitoring and weighing in on the multiple iterations of food sales tax modification bills, all of which have the potential to significantly alter the amount and composition of future state revenues. Additionally, we are closely following the appropriations committees parsing through agency budgets in the lead up to the omnibus budget bill that will close out the session.  

At the top of lawmakers’ decisions is how the Consensus Revenue Estimating (CRE) Group’s projected historic surplus of $2.9 billion will be spent … without sabotaging future budgets. Continuing national inflation and the economic ripple effects of foreign unrest are as good as any reason to remain cautious even though strong revenues have been sustained for at least the last 18 months. This surplus should be used to make meaningful investments in the lives of Kansas families in the most fiscally responsible way to ensure Kansans benefit in the long term.  

Lawmakers have discussed budget priorities like providing care for mothers and their newborns, investing in housing quality and stock improvements in the rural areas they hope to help flourish, and raising pay for state employees caring for the most vulnerable Kansans, including veterans and the intellectually and developmentally disabled. Other discussions for the budget surplus have included bolstering the Kansas Public Employees Retirement fund and paying off lingering debt, both of which would be prudent choices with a tenuous surplus.  

The coming weeks of agency budget discussions and appropriations bill hearings in both chambers will show, as all budgets do, what our elected officials value and what tradeoffs they are willing to make to get their (good or bad) pet projects passed. KAC understands that the budget is at the core of how the state meets the needs of its residents and will continue to advocate for financially responsible policymaking that ensures that every Kansan has the same opportunities to succeed and thrive. 

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