Gov. Laura Kelly urges caution in terms of state spending despite tax revenue bump

State revenue topped $665 million in August, which was nearly $23 million more than projections.

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State News

September 4, 2024 - 1:17 PM

Gov. Laura Kelly, a Democrat, said the surge in state individual income tax and sales tax collections in August didn’t mean the state could go on a spending spree because tax cuts signed into law in June won’t fully be felt until Jan. 1. Photo by Sherman Smith/Kansas Reflector

TOPEKA — Gov. Laura Kelly said August state government tax revenue of nearly $23 million above projections reflected greater-than-last-year collections of personal income tax and retail sales tax.

Kelly, a Topeka Democrat, said total state revenue for the month hit $665 million, which was $22.8 million and 3.5% above the estimate developed in April by state budget and economic analysts. Tax collections by the Kansas Department of Revenue during August were 4% higher than in August 2023.

The revenue stream to state government hasn’t been fully modified by tax-cut law approved during a special session by the 2024 Legislature and Kelly. In June, the governor signed a bill reducing state taxes by $1.2 billion over three years that was approved with bipartisan support of legislators.

The focus of that compromise law was change to the state income tax rate, but a statewide sales tax on groceries will be fully repealed Jan. 1.

“While we are seeing collections higher than the estimate, we likely won’t see the impact of the income tax cuts from Senate Bill 1 on monthly collections until the beginning of next year,” Kelly said. “Because of that timing, we must continue to be fiscally responsible for our long-term outlook.”

Individual income tax collections for Kansas were $329 million, or $19.4 million, more than the August estimate. That represented a 10.1% surge from August one year ago. In terms of corporate income tax collections, the state took in $20.2 million during the month. That meant the state received $9.8 million and 32% less than the official projection for August. Kansas corporate tax revenue was 19% higher in August 2023.

Combined retail sales tax receipts to Kansas grew to $294 million in August. That was $12.6 million or 4.5% more than the estimate and up $2.2 million or 0.7% from August 2023.

House Speaker Dan Hawkins, a Wichita Republican, said the revenue report demonstrated the “state continues to take in more taxpayers’ dollars than needed.”

He said the 2025 Legislature — the entire House and Senate are up for election in November — should work on property tax reform when the session opened in January.

The special session tax bill was endorsed 121-2 in the House and 34-4 in the Senate in June, but there was bipartisan disappointment the final compromise didn’t do much to moderate state property taxes.

“To help get Kansans’ taxpayer money back in their hands where it belongs, House Republicans are already working on legislation for the 2025 session that would help ease the burden of rising property taxes,” Hawkins said. “These revenue numbers (for August) provide even more proof that additional tax relief, especially property tax relief, is not only needed but can be implemented responsibly.”

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