UPDATED: Kansas collects almost $2 billion more in revenue

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(Updated to include comments from Kansas Action for Children and the Kansas Chamber)

Kansas collected nearly $2 billion more in revenue during the just-ended fiscal year than a year earlier, leaving the state with a record nest egg, revenue figures show.

The new numbers released Friday showed that the state had collected $8.9 billion for the fiscal year that just ended on Wednesday.

That was about $1.8 billion, or 26%, more than what the state collected during fiscal year 2020, which covered the very start of the pandemic when businesses were forced to close to prevent the spread of COVID-19.

It is a stark turnaround from a year ago, when the state was projected to be headed for dark financial times because of the pandemic.

Overall, the state brought in about $758 million, or 9%, more in fiscal year 2021 than what had been projected.

It will leave the state with a nest egg of almost $1.9 billion going into the new fiscal year that started Thursday.

The state’s ending balance could swell beyond $1.9 billion depending on how much state agencies didn’t spend and rolled over into the new fiscal year.

Fiscal analysts say it’s the largest ending balance – in terms of dollars and percentage of expenses – the state has ever had.

“As we transition into the next fiscal year, my administration will continue moving our economy forward by prioritizing pro-growth policies that will support Kansas businesses and families,” Gov. Laura Kelly said in a statement.

The new number immediately set off talks about more tax cuts.

“It’s great to see this strong revenue report. But we have to remember these are funds that come from the pockets of Kansas workers and businesses,” House Speaker Ron Ryckman Jr. said in a statement.

“Given the size of the ending balances, it is time to consider how we can give some of those dollars back to the Kansans working hard to produce them.”

It was unknown whether the new revenue numbers would give Kelly an opportunity to lower or eliminate the sales tax on food as she heads into reelection.

Kelly campaigned for governor in 2018, promising to cut the state sales tax on food, which is one of the highest in the country.

Of the 45 states with a sales tax, just 13 levy the tax on food.

John Wilson, president of Kansas Action for Children, said he hoped the brighter revenue picture would set the table for discussion about spending money for health care and trying to make childcare more affordable.

“The revenue numbers are encouraging,” Wilson said.

“There are plenty of investments we can make with the revenue that is coming in now, including expanding Medicaid, including increasing our commitment to childcare affordability and accessibility in Kansas,” he said.

He also suggested that the Legislature look for ways to reduce property and sales taxes

The revenue numbers “open the door for lawmakers to have a discussion about making sure we have a tax code that works for everybody and isn’t just prioritizing wealthy individuals and corporations,” he said.

Eric Stafford, lobbyist for the Kansas Chamber of Commerce, said the numbers indicate a need to look at tax cuts.

“It’s time to look at lowering rates – sales, personal income and corporate income all should be discussed,” Stafford said.

The chamber urged the governor and the Legislature to consider its report on taxes that was done by the Tax Foundation a couple years ago.

What’s happening in Kansas is seen elsewhere across the country.

A new report out last week from the National Association of State Budget Officers revealed that revenues were beating projections in 38 states.

Revenues came in below forecasts in eight states, and were on target in four states, the report said.

Overall, fiscal 2021 general fund revenues nationally are expected to total $908.1 billion based on current estimates, representing 3.7% over fiscal 2020 actual collections.

States saw revenues decline 0.6% in 2020, the first time general fund revenues declined year-over-year since the Great Recession in fiscal 2009 and fiscal 2010.

The budget officers’ report cited several factors for the increase in revenues:

  • Federal stimulus measures have put more money into the economy, which helped
    ease state revenue losses.
  • High-income earners have been somewhat insulated from the economic fallout of the pandemic, which has limited the effect on personal income tax collections.
  • The type of consumption affected by the pandemic comprised a relatively small portion of states’ sales tax bases.
  • The ability for states to collect online sales taxes following the U.S. Supreme Court decision in Wayfair v. South Dakota.

Looking forward, the report projected that state general fund revenues nationally would grow 2.3% in fiscal 2022 compared to fiscal 2021.

The two largest sources of general fund revenue – sales taxes and personal income taxes – are estimated to grow as well.

The report anticipated 3.9% growth during 2022 for sales taxes and 4.3% growth in sales in personal income taxes.