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In Kansas, explanations for tax collections may vary

Kansas officials have explanations for low tax collections, but don’t mention the same contributing factor when touting high collections.

In March, Kansas Governor Laura Kelly, in response to the COVID-10 pandemic, delayed the due date for Kansans to file and pay income taxes from April 15, 2020 to July 15, 2020. 1 This change was bound to affect state tax collections for April, and it did.

When presenting tax collections for the month of April 2020, the Department of Revenue explained: “As predicted, the State of Kansas saw a decrease in total tax collections when compared to April of Fiscal Year 2019. These reductions are largely due to announced tax date extensions, which gave relief to Kansans while moving collections into the Fiscal Year 2021.” 2

Specifically, individual income tax revenue for April 2020 fell by $526 million (65.0 percent) from April 2019. 3 Corporate income tax collections also fell, but caused a much smaller effect. (Over the past five years, individual income tax collections have accounted for about 45.0 percent of total tax collections, while corporate income tax was 6.7 percent of the total.)

For Kansas state government, the fiscal year starts on July 1, and is named for the calendar year in which it ends. Fiscal year 2020, for example, began on July 1, 2019, and ended on June 30, 2020. So not only was a lot of collections shifted from one month to another, the shift also crossed the fiscal year boundary.

When July 2020 tax collections were released, the governor’s office commented:

The State of Kansas starts Fiscal Year 2021 by surpassing its total tax-only collections by $484.6 million compared to July of last fiscal year. …

The State collected $619.6 million in individual income taxes for the month; an increase of $395.3 million, or 176.3%, compared to the July of Fiscal Year 2020. However, these collections were $30.4 million, or 4.7%, less than the estimate for the month. Corporate income tax collections were $69.8 million; $5.2 million, or 6.9%, less than estimated but an increase of $54.6 million compared to July of FY 2020. [Kansas Governor’s office news release, August 4, 2020. Available at https://governor.kansas.gov/kansas-total-tax-collections-484-6-million-ahead-of-july-of-last-fiscal-year/.]

Note there is no mention of why the July income taxes were so much higher than last July. While I have presented only an excerpt of the news release, the remainder does not mention the shift of tax deadlines as the reason for the increase.

When announcing August 2020 tax collections, the governor released this, in part:

The state is $35.6 million, or 2.4%, ahead of projections for the year with $1.5 billion in total tax collections for the fiscal year. When comparing total tax collections over the same timeframe to the previous fiscal year, the State of Kansas is $531.0 million, or 53.5%, ahead of Fiscal Year 2020. [Kansas Governor’s office news release, September 1, 2020. Available at https://governor.kansas.gov/state-of-kansas-tax-collections-40-2-million-above-estimates/.]

Here, the press release touts large revenue growth for the fiscal year. But only two months of the fiscal year have passed, and for one of these, collections benefitted mightily from the shift of tax deadlines. The news release did not mention this as a factor in the fiscal year’s increase in tax collections compared to the previous year.

It is not the case that the governor and state officials are not aware of the effect of shifting tax deadlines on revenue. The governor mentioned the shift in April to explain low collections.

But there was no mention of the same factor when celebrating high collections.

I asked the governor’s office and the Department of Revenue to explain this, but there was no response. Michael Austin, who is Director of the Sandlian Center for Entrepreneurial Government at Kansas Policy Institute, said: “Unfortunately it’s another example the administration is more focused on hiding bad press, than to simply present Kansans with facts and reasonable analysis. With July and August income tax revenues offsetting last year’s decline, it’s clear the tax extension moved revenues from April to July and August.”

The example Austin referred to concerns a chart of COVID-19 data that was presented in an unorthodox manner that bolstered the administration’s positions.

For more on Kansas tax collections, see Kansas tax revenue, August 2020 and my interactive visualization of Kansas tax revenue.


Notes

  1. Executive order 20-13. Available at https://governor.kansas.gov/wp-content/uploads/2020/03/EO-20-13-Executed.pdf.
  2. Kansas Department of Revenue news release, May 1, 2020. Available at https://www.ksrevenue.org/press/2020/pr05012020.html.
  3. Weeks, Bob. Kansas tax revenue experiences effects of pandemic response. Available at https://wichitaliberty.org/kansas-government/kansas-tax-revenue-experiences-effects-of-pandemic-response/.
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