Kansas Tax Revenue, August 2022

For August 2022, Kansas tax revenue was 8.3 percent higher than August 2021. Collections for fiscal year 2023 are 0.6 percent greater than the prior year.

Tax reports from the State of Kansas for August 2022 show tax revenues rising from the previous month and also more than the same month the prior year.

When reporting on Kansas tax collections, the comparison is usually to the estimated tax collections. Those estimates are revised based on economic conditions. To get a feel for the effects of the Kansas economy and state tax policy, we should compare to the same month the prior year. (The estimated revenue figures are still important because the state bases the budget on them. If the actual revenue is below the estimated revenue, there may not be enough income to pay expenses.)

For August 2022, individual income tax collections were $307.2 million, higher by 1.6 percent from last August. Retail sales tax collections rose by 5.8 percent to $239.6 million from last August. Total tax collections were $652.5 million, up 8.3 percent from last August. Table 1 summarizes. (Click charts and tables for larger versions.)

In its presentation of this data in May, Kansas Legislative Research noted this regarding retail sales tax collections: “The increase was primarily driven by the impact of inflation on prices.” Inflation is still high.

For fiscal year 2023, which started on July 1, 2022 and ends with June 2023, total tax collections are higher by 0.6 percent over the previous fiscal year. Table 2 shows these figures.

Chart 4 compares collections to the same month of the previous year.

Kansas tax revenues continue to outperform estimates. When the line is above zero in nearby chart 5a, actual revenue was greater than the estimate, and the line is nearly always positive for the past five years or so. Estimates are essential because the legislature uses them to make spending decisions. Beyond that, the variance between actual revenue and the estimate doesn’t have much meaning. The governor uses a positive variance as a sign of economic success, remarking in her press release: “In June, we brought in more money than was estimated — re-enforcing that our state’s economy is continuing its forward momentum.” But this is incorrect. It just as easily means the estimates are wrong, possibly for reasons other than the inherent difficulties of making estimates.

Over the past five or so years, revenues have exceeded estimates, sometimes by large margins. Chart 5b shows the cumulative variance for each fiscal year, with a positive number meaning actual collections were greater than estimated. The trend of positive variances starting with fiscal year 2018 is distinct. This chart does not show total collections and does not illustrate the health of the Kansas economy. It simply compares estimates to actuals.

I have updated my interactive visualization of Kansas tax revenue with this data. Click here to use it.

This month saw large fund transfers. As passed in SB 421, $146.1 million was transferred to KPERS-School, the state retirement fund for school employees. This accounts for nearly all the August transfers. See my report from May for details.

The governor’s press release on this topic is here. The report from Kansas Legislative Research Department is here. It includes the quarterly economic indicators report.

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