Kansas tax collections decline by 27 percent for February

TOPEKA | The Department of Revenue reported Friday that Kansas collected $71 million less in tax revenues than expected this month, leading one lawmaker to call for additional cuts to the current state budget.

Gov. Mark Parkinson called the numbers bad, and his spokesman, Seth Bundy, said the governor would outline a plan next week to deal with the shortfall. Bundy declined to speculate about its contents.

Other legislative leaders weren’t ready to join House Speaker Mike O’Neal in pushing for new spending cuts. They said they need to know how much of the shortfall is tied to the state’s soft economy and how much to Kansas paying income tax refunds earlier than expected.

Friday’s report complicated a difficult debate over the budget and tax policy. It came only hours after House members gave first-round approval to a bill aimed at creating jobs by expanding an existing business tax break.

The Democratic governor and the Republican-controlled Legislature keep the current budget in balance and eliminate a budget shortfall for fiscal 2011, which begins July 1. The 2011 gap is projected at $416 million, but this figure will rise next week after legislative researchers consider Friday’s report.

“This obviously is a game-changer,” said O’Neal, a Republican from Hutchinson. “These numbers are grim enough that we will have to make adjustments.”

The state expected to collect $266 million in taxes in February but took in $195 million, a difference of 27 percent.

It was the third consecutive month that collections fell short of expectations. The gap for the 2010 fiscal year through February is now $105 million, with total tax collections of $3.1 billion falling 3.3 percent short of expectations.

Officials said Kansans appeared to be filing for income tax refunds more quickly this year than last. This could mean fewer refunds than expected in March and April — causing a rebound in tax collections.

Senate President Steve Morris, a Hugoton Republican, rejected O’Neal’s call for new budget cuts.

“We don’t know what the March numbers are,” he said. “We don’t know what the April numbers will tell us.”

The state had five rounds of cuts and other adjustments last year to keep the 2010 budget balanced. If revenues met expectations for the entire fiscal year, the state would break even.

Parkinson said the state would overcome its financial problems by “not panicking.”

“None of the options are good, but we will keep our composure,” Parkinson said in his statement.

Previously, Parkinson said he opposed new spending cuts and had proposed raising sales and tobacco taxes.

Raising taxes has proven unpopular so far, and many Republican legislators haven’t given up on using tax breaks or incentives to stimulate the economy.