Kansas tax revenue experiences effects of pandemic response

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For April, Kansas retail sales tax collections fell by 8.2 percent from last April, and much income tax revenue is deferred to July.

Two reports from the State of Kansas reveal some of the effects of the response to the pandemic on state finances.

On the current situation, the Consensus Revenue Estimating Group remarked, “given the magnitude and number of uncertainties that currently exist, and the potential for volatility of our forecasts has never been higher.” The group met on April 20, 2020, and issued its long-form report dated April 30.

For revenue, the group “decreased the overall estimate for FY 2020 and FY 2021 by a combined $1.272 billion relative to the previous estimate made in November.” Fiscal year 2020 ends on June 30, 2020.

When reporting on Kansas tax collections, the comparison is usually made to the estimated collections. Those estimates have been revised in April. To get a feel for the effects of the response to the pandemic, it is best to compare to the same month the prior year, with a few caveats.

For example, individual income tax revenue fell by $526 million (65.0 percent) from last April, based on a revenue report released on May 1. Corporate income tax revenue fell by nearly the same percentage. The estimating group notes that the deadline for filing and paying these taxes was moved from April to July, which explains the steep decline. The CRE group estimates $645.8 million of tax revenue will be deferred to July, which is in fiscal year 2021. Note that this revenue is deferred, meaning the state still expects to collect it, as it reflects economic activity during calendar year 2019, before the response to the pandemic.

Retail sales tax collections fell by $16 million (8.2 percent) from last April. For all excise taxes, which includes retail sales tax, revenue fell by $11 million (4.5 percent). Compensating use tax rose by $5 million (14.9 percent).

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

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