New fiscal forecast for Kansas fuels GOP's tax-cut dreams

TOPEKA, Kan. (AP) — Kansas officials on Tuesday issued a new, more optimistic fiscal forecast for state government and projected healthy cash reserves through June 2022, giving Republican lawmakers new ammunition in pushing for state income tax cuts over Democratic Gov. Laura Kelly’s objections.

The fiscal forecasters revised the state’s projections for tax collections during the current 2021 budget year, which ends June 30, upward by 3.9% or $304 million. They’re now predicting that Kansas will collect $8.15 billion in taxes, rather than the $7.8 billon predicted in the previous forecast issued in November.

The forecasters also made a small change in the projections for tax collections for the 2022 budget year, increasing the total by 0.5%, or $38 million, to almost $7.7 billion. The projection for 2022 is lower than for 2021 because a delay in last year’s income tax filing deadline to July 15 artificially inflated tax collections for 2021.

Legislative researchers also projected that, based on budget legislation drafted by the Republican-controlled Legislature, the state will have $1.15 billion in cash reserves on June 30 and a cushion of $821 million at the end of June 2022.

“The resulting balances show our state has more than enough resources to give Kansans the tax relief they have been entitled to since 2017,” House Speaker Ron Ryckman Jr., an Olathe Republican, said in a statement.

Republicans passed a bill cutting taxes for individuals and businesses who are paying more to the state because of changes in federal tax laws at the end of 2017. It would have saved taxpayers roughly $95 million a year.

But Kelly vetoed it last week, saying it was fiscally irresponsible. GOP leaders immediately promised to try to override Kelly’s veto when lawmakers return May 3 from their annual spring break.

Kelly’s budget director, Adam Proffitt, sought to temper news of the more positive forecast with a warning that the coronavirus pandemic hasn’t yet ended and tried to counter any suggestion that the state will be financially flush.

“The economy does look strong,” Proffitt said during a Statehouse news conference. “But we’re not out of the pandemic yet, so we need to make sure we’re proceeding cautiously and not getting over-exuberant here.”

The state’s tax collections had exceeded expectations for eight consecutive months through March and for all but four months during the past four years.

And the new forecast would have been even more optimistic were it not for a new tax break for businesses approved by Congress in December as part of a COVID-19 relief bill. That break is expected to cost the state $360 million in revenues from now through June 2023.

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