Kansas closed its fiscal year with tax collections running 9.3% over estimates and its highest reserves since 1980, officials said.
“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,” said Gov. Laura Kelly.
For June, total tax collections were $854.4 million or nearly 23% more than estimated.
“Our positive June tax receipt numbers show that our efforts to rebuild our state’s economic foundation and strengthen our economy are paying off,” Kelly said.
Individual income tax collections were 15% above estimates and 5.5% more than the previous June. Corporate income tax collections were 136.5% more than the estimate and 103% more than the same month last year.
“The strong performances from both individual and corporate estimated tax would suggest that perhaps the capital gains from the stock market activity for individuals, and overall corporate profits continue to far exceed expectations,” said Secretary of Revenue Mark Burghart.
June retail sales tax collections were $224.2 million, which was $24.4 million, or 12.2% more than the estimate. That is also $21.3 million, or 10.5%, more than the same month of last fiscal year.
A flood of federal funds has lifted Kansas along with other states, covering gaps in state revenues.
"Unprecedented federal aid has contributed to budget stability and the most recent stimulus package grants states additional flexibility to manage their budgets," said S&P Global Ratings credit analyst Jillian Legnos.
Revenues in the new fiscal year that began July 1 were reduced when the Kansas Legislature overrode Kelly’s veto on a $94 million tax package that included $130 million in tax cuts and $35 million in new sales taxes.
Kelly, a Democrat with a Republican legislature, won office campaigning against the tax policies of Republican predecessor Sam Brownback. Brownback’s repeated tax cuts left the state short of needed revenue for several years.
“It’s as if legislative leaders want to return to the days of budget crises, gutting transportation spending, and 4-day school weeks,” Kelly said in a statement after Republicans overrode her veto.
The surplus revenues would not have been predicted with the nation was hit hard economically by the COVID-19 pandemic.
In April 2020, state officials were predicting a $653 million revenue shortfall for the past fiscal year.
The state issued a certificate of indebtedness of $900 million in July 2020, due to the uncertainty of revenues resulting from the pandemic. As revenues rebounded more quickly than anticipated, the Consensus Revenue Estimating Group increased its forecast for FY 2021 by $319.8 million compared to the November 2020 estimate.
Because of a strong fiscal year 2021 ending balance and FY 2022 projected revenues, cash flow is strong enough that the state did not need a certificate of indebtedness in FY 2022. That is the first time since 1999 that the state has not issued such a certificate.
The revised estimate of state general fund receipts for FY 2021 is $8.1 billion, an increase of $392.2 million from the previous estimate made in November. The estimate for total taxes was increased by $304.0 million, while the estimate of other revenue was increased by $88.2 million, according to a report from the state budget office.
The revised estimate is $1.2 billion, or 17.4%, above actual FY 2020 receipts.
Revenue for the current fiscal year ending next June 30 are estimated to be $7.562 billion, an increase of $78.3 million over the November estimate. The new FY 2022 estimate is $537.9 million or 6.6% below the newly revised FY 2021 estimate.
Budget officials say that is due to more than $500 million in receipts that were shifted from FY 2020 to FY 2021 because of various filing deadline extensions.
Kansas has an issuer credit rating of Aa2 from Moody's Investors Service and AA-minus from S&P Global Ratings.
