For December 2022, Kansas tax revenue was 21.9 percent higher than December 2021. Collections for fiscal year 2023 after six months are 8.8 percent greater than the prior year.
Tax reports from the State of Kansas for December 2022 show tax revenues falling from the previous month and higher 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. To get a feel for the effects of the Kansas economy and state tax policy, 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 below the estimated revenue, there may not be enough income to pay expenses.)
For December 2022, individual income tax collections were $374.8 million, higher by 5.5 percent than the previous December. Retail sales tax collections rose by 4.3 percent from the previous December to $234.0 million. Total tax collections were $1,048.9 million, up 21.9 percent from last November. The major reason for this large increase was the corporate income tax, which rose to $281.0 billion, up by 112.9 percent from the same month one year prior. Table 1 summarizes. (Click charts and tables for larger versions.)
In its presentation of this data in May, Kansas Legislative Research noted this regarding retail sales tax collections: “The increase was primarily driven by the impact of inflation on prices.” Inflation is still high, and the rise in retail sales tax collections is close to the inflation experienced over the past year.
For fiscal year 2023, which started on July 1, 2022 and ends with June 2023, total tax collections are higher by 8.8 percent over the previous fiscal year. Table 2 shows these figures.
Charts 4a and 4b compare collections to the same month of the previous year.
Kansas tax revenues continue to outperform estimates. When the line is above zero in nearby chart 5a, actual revenue was greater than the estimate, and the line is nearly always positive for the past five years or so. Estimates are important because the legislature uses them to make spending decisions. Beyond that, the variance between actual revenue and the estimate doesn’t have much meaning. The governor uses a positive variance as a sign of economic success, remarking in her press release for October: “Governor Laura Kelly today announced that October’s total tax receipts were $740.1 million — 11%, or $73.2 million, above the estimate, and $77.4 million, or 11.7%, more than October of last year. October marks the 27th month in a row in which the state has exceeded its estimated collections … For four years, my administration has worked relentlessly to help businesses grow and succeed, create quality jobs, and get our state back on track.” But this is incorrect. It just as easily means the estimates are wrong, possibly for reasons other than the inherent difficulties of making estimates.
Over the past five or so years, revenues have exceeded estimates, sometimes by large margins. Chart 5b shows the cumulative variance for each fiscal year, with a positive number meaning actual collections were greater than estimated. The trend of positive variances starting with fiscal year 2018 is distinct. This chart does not show total collections and does not illustrate the health of the Kansas economy. It simply compares estimates to actuals.
There were transfers of $137.3 million from the general fund in December. Most of this amount — $125 million — was the result of SB 421, which calls for transfers of $1.125 billion to KPERS, the state employee retirement fund. Of this, $125.0 million was transferred in December to the KPERS school fund.
Of note: The Kansas statewide sales tax on food fell effective January 1, 2023, and does not affect December 2022 tax revenue, except to the extent that shoppers may have delayed purchases to take advantage of the lower tax rate.
I have updated my interactive visualization of Kansas tax revenue with this data. Click here to use it.
So far there is no press release from the governor for this topic for this month. The report from Kansas Legislative Research Department is on this page.