Kansas Revenues in March Boosted by Insurance Premium Tax

Kansas came close last month to hitting its target for tax collections, and the shortfall of less than $2 million reported represented relatively good news after a winter of gloomy budget developments.

Sales tax collections — disappointing for months — rebounded in March to exceed expectations, and insurance premium taxes were better than anticipated. The state collected $447.8 million in March, when it anticipated taking in $449.4 million, a shortfall of only 0.4 percent.

Insurance premium tax collections were robust. For March, the collections of $21.7 million exceeded expectations by $6.7 million, or nearly 46 percent. For the fiscal year to date, the collections were $107.3 million, ahead of expectations by $11 million, or 11 percent.

Clark Shultz, the state Insurance Department’s director of governmental affairs, said the increase is tied largely to rising health insurance premiums. He said the 2010 federal health overhaul championed by President Barack Obama has led to more people having coverage and — because of its mandates — consumers paying higher premiums overall.

“It’s almost right on target,” Revenue Secretary Nick Jordan said during an interview. “We’re pleased to see March like it is.”

But the shortfall in tax collections since the fiscal year began in July 2015 remains larger, at 1.9 percent. The state collected $4.13 billion through March, about $81 million less than anticipated.

The $16 billion budget approved by lawmakers for the state’s next fiscal year, beginning in July, would leave less than $50 million in cash reserves at the end of June 2017.

The report on March tax collections came ahead of an April 20 meeting in which legislative researchers, university economists and officials in Gov. Sam Brownback’s administration will revise the state’s revenue projections. Legislators have expected the new forecast to be more pessimistic because tax collections have fallen short of expectations 11 of the past 12 months.

“I still have grave concerns regarding the overall shortfall for the year,” House Minority Leader Tom Burroughs, a Kansas City Democrat, said in a statement. “Looking at other economic indicators, we see Kansas families struggling to improve their quality of life.”

Kansas has struggled to balance its budget since the Republican-dominated Legislature slashed personal income taxes in 2012 and 2013 at Brownback’s urging in hopes of stimulating the economy.

Individual income tax collections fell about 9 percent short of expectations in March, off $14.4 million, at $145.6 million. The picture for the fiscal year to date was better: Collections of $1.55 billion, short of expectations by $56.1 million, or 3.5 percent.

Jordan said the shortfall in individual income tax collections were largely a result of ongoing “weakness” in manufacturing and oil and natural gas production.

As for the rebound in sales tax collections, Jordan said he does not yet know what the state can read into the numbers.

The state collected $181.9 million in sales taxes in March, $5.9 million, or 3.3 percent, greater than expected. But collections for the fiscal year to date, at $1.7 billion, are $20.8 million, or 1.2 percent less than anticipated.