Kansas tax revenue, October 2021

For October 2021, Kansas tax revenue was 11.1 percent greater than October 2020, and 24.4 percent less than September.

Tax reports from the State of Kansas for October 2021 show tax revenues falling from the previous month and greater than the same month the prior year.

When reporting on Kansas tax collections, the comparison is usually to the estimated tax collections. Those estimates are revised based on economic conditions affected by the response to the pandemic. To get a feel for the effects of the response to the pandemic, we should compare to the same month the prior year.

(The estimated revenue figures are still important because the state bases the budget on them. If the actual revenue is much below the estimated revenue, there may not be enough income to pay expenses.)

For October 2021, individual income tax collections were $301.6 million, up by 6.3 percent from the prior October Retail sales tax collections rose by 7.9 percent to $227.7 million from October 2020. Total tax collections were $662.7 million, up 11.1 percent from last October. A nearby table summarizes. (Click charts and tables for larger versions.)

For fiscal year 2022, which started on July 1, 2021, total tax collections are lower by 2.8 percent over the same period of the previous fiscal year.

Focus on Estimates

The press release from the governor’s office started with, “Governor Laura Kelly today announced that October continued the trend of Kansas’ total tax collections being more than the estimate as total tax collections were $662.7 million for the month.” Also, “The last time the state had tax collections below the monthly estimate was July 2020.” This emphasis on collections being larger than the estimate is a common feature of these announcements.

Estimates are important because the legislature uses them to make spending decisions. Beyond that, the variance between actual and estimate doesn’t have much meaning. The governor uses a positive variance as a sign of economic success, but this is incorrect. It just as easily means the estimates are wrong, possibly for reasons other than the inherent difficulties of making estimates.

My interactive visualization of Kansas tax revenue has been updated with this data. Click here to use it.

A chart from the visualization, shown below, illustrates the composition of tax revenue in Kansas. Since 2012, two sources have provided the lion’s share of tax revenue. Together, Individual Income Tax and Retail Sales Tax have provided 78 percent of revenue. Adding Corporate Income Tax and Compensating Use Tax, and the total is nearly 91 percent.

The governor’s press release for this data is at Governor Laura Kelly Announces Kansas’ October Total Tax Receipts. As of this writing the report from Kansas Legislative Research Department is not available, but will be on this page when it is prepared.