Budget News

Kansas collected nearly $38 million more in taxes than anticipated in August, raising hopes Tuesday that the state can avoid major reductions in its current budget.

The state Department of Revenue issued a preliminary report showing that the state collected $414 million in taxes during the month. That is 10 percent more than the $376 million that had been forecast by the state's official revenue projections.

Both retail sales and individual income tax collections were stronger than anticipated. The surplus made up for a small shortfall in tax collections in July, the first month of the state's 2011 fiscal year. For the two months, tax collections were a net $35 million ahead of expectations.

Democratic Gov. Mark Parkinson saw the latest figures as confirmation that Kansas' economy isn't going to suffer even though the state raised its sales tax from 5.3 percent to 6.3 percent on July 1. The revenue projections account for the increase.

Parkinson pushed for the tax increase to avoid further significant cuts in education funding, social services and other programs following multiple rounds of budget reductions in 2009. Critics of the tax increase predicted it would blunt any recovery.

"Higher than expected revenues this month is another clear sign that Kansas is on the road to recovery," Parkinson said in a statement. "Kansas continues to show great progress, and I remain optimistic for our bright future."

But even Parkinson acknowledged that revenues still might fluctuate in coming months, and other officials said Kansans shouldn't read too much into the August figures.

Alan Conroy, director of the Legislative Research Department, said September collections will include some quarterly individual income tax payments, as well as the last sales taxes collected on back-to-school purchases.

"We certainly don't have the recession solved yet, but at least the numbers are a step in the right direction," said Senate President Steve Morris, a Hugoton Republican who supported the sales tax increase. "That's such a breath of fresh air after what we've been through."

If the state's month-to-month tax collections were to fall significantly short of expectations, the state could be forced to revise its $13.7 billion budget. Last year, revenue shortfalls led Parkinson to impose cuts in July and November, when lawmakers were out of session.

Conservative Republicans still believe the sales tax increase will dampen economic activity. But GOP House Majority Leader Ray Merrick, of Stilwell, acknowledged that the August figures could indicate a positive trend.

"Let's just hope it continues," he said.

The state collected almost $193 million in individual income taxes in August, about 4 percent more than the $185 million predicted.

Retail sales tax collections were almost $169 million, compared to a projection of $143 million. The surplus was $26 million, or about 18 percent.