For January 2024, Kansas tax revenue was 11.3 percent lower than January 2023, and 6.5 percent lower than estimated.
Tax reports from the State of Kansas for January 2024 show tax revenues lower 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.)
Table 1 shows January 2024 tax collections for major categories. Notably, corporate income tax collections fell by 45.9 percent from the same month last year. Retail sales tax fell by 7.3 percent, while individual income tax fell by 3.9 percent. Overall, collections were 11.3 percent lower than in the same month one year ago. (Click charts and tables for larger versions.)
Of note, on January 1 the statewide sales tax rate on groceries fell to two percent from four percent in 2023.
January is the seventh month of fiscal year 2024. Table 2 shows collections for this fiscal year and the last at the same point. Collections for this year are 1.7 percent lower than the same point last year.
Charts 4a and 4b compare collections to the same month of the previous year.
Kansas tax revenues have underperformed estimates, especially for the two largest sources, which are individual income taxes and retail sales tax. Table 3 shows the variance between estimated and actual revenue for major tax items for January, while table 4 summarizes the accumulated variance for the fiscal year.
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. Chart 5b shows the variance cumulative for each fiscal year. For the current fiscal year, the variance is negative. This differs from recent fiscal years, when variances were positive, and by large amounts. Reporting on this month’s figures indicates Governor Kelly is aware of this trend: “Coming short of the estimates for the third month in a row emphasizes that tax cuts must be done in a fiscally responsible way.” See Kelly raises red flag after January tax revenue short of projection for third straight month.
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 has cited positive variances as a sign of economic success, writing in one press release: “Time and again, we have exceeded our estimated tax collections, providing further proof that we can responsibly axe taxes on groceries, retirement, and property for Kansans.”
For the month before that, she said: “Revenues have exceeded estimates for 30 out of the last 31 months — a clear sign that our efforts to make Kansas a place where businesses and families want to call home is paying off.” But this is not the only conclusion to draw. Exceeding estimates just as easily means the estimates are wrong, possibly for reasons other than the inherent difficulties of making estimates. And if the purpose of these estimates is to be accurate, the state is not doing a very good job.
Over the past five or so years, revenues have exceeded estimates, sometimes by large margins. For the current year, however, this has not been the case. 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.
Chart 7a shows the composition of tax revenue for the calendar year 2023. The first four sources — individual income tax, retail sales tax, corporate income tax, and compensating use tax — account for nearly 95 percent of revenue.
The report from Kansas Legislative Research Department is on this page. There appears to be no statement in this topic from the governor this month. I have updated my interactive visualization of Kansas tax revenue with this data. Click here to use it.
