- Associated Press - Tuesday, September 30, 2014

TOPEKA, Kan. (AP) - Kansas reported Tuesday that its tax collections fell $21 million short of expectations in September which could expand a predicted budget shortfall as Republican Gov. Sam Brownback faces a tough re-election battle over income tax cuts he engineered.

The Department of Revenue said softer-than-anticipated personal income tax collections reported in its preliminary revenue figures could rebound in future months. The department also said corporate income tax collections exceeded expectations and said it suggested a good business climate.

Even with the good news in corporate income taxes, the state collected $521 million in taxes for the month, or 4 percent less than the $542 million it had anticipated. Since the fiscal year began July 1, the state has taken in $1.35 billion in taxes, some $23 million, or 1.7 percent less than anticipated for the past three months.

The state has cut its top personal income tax rate 26 percent and exempted the owners of 191,000 businesses from personal income taxes. Brownback contends the reductions are stimulating economic growth, but before Tuesday’s report, the Legislature’s nonpartisan research staff predicted a budget shortfall of $238 million by July 2016.

“Tax cuts take a little bit of time to be able to generate (revenue) and move forward,” Brownback said during an interview on Fox News. “People are looking at it (Kansas) and saying, ‘OK, I think this is moving in the right direction.’”

But Democratic challenger Paul Davis has made inroads among Republican moderates by arguing that the personal income tax cuts Brownback championed have wrecked the state’s finances, jeopardizing funding for public schools and social services.

“This continuing slide downward probably means more cuts to keep the state in the black,” Kansas Democratic Party Chairwoman Joan Wagnon, a former revenue secretary, said in a statement.

Shawn Sullivan, the governor’s budget director, announced last week that the administration had identified $101 million in potential budget savings through June 2016, focusing on consolidating computer systems, savings in the health plan for state workers and other administrative initiatives. Seven major agencies also are hunting for further efficiencies.

The Department of Revenue pointed to a bright spot in its latest report, $86.5 million in corporate tax collections in September, which were 33 percent more than the predicted $65 million. Corporate income tax collections also are more robust than they were last year.

“We’ve worked hard to create a good business climate in Kansas, so it is encouraging to see corporate income tax receipts performing so strongly,” Revenue Secretary Nick Jordan said in a statement.

Personal income tax collections fell more than $42 million short of the September target of $250 million, a shortfall of nearly 23 percent. Individual income tax collections also are running about 9 percent behind where they were last year.

Department of Revenue spokeswoman Jeanine Koranda said this month’s shortfall can be attributed to many taxpayers making estimated payments based on their 2013 incomes, and they’re likely to face additional payments early next year.

But Davis, the Kansas House minority leader said in a statement that the tax cuts represent a failed economic experiment, and, “It’s not going to work.”

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Online:

Kansas Department of Revenue: https://www.ksrevenue.org/index.html

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .

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