For February 2023, Kansas tax revenue was 9.4 percent higher than February 2022. Collections for fiscal year 2023 after eight months are 9.2 percent greater than the prior year.
Tax reports from the State of Kansas for February 2023 show tax revenues falling from the previous month and higher 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 February 2023, individual income tax collections were $211.3 million, higher by 15.2 percent than the previous January. Retail sales tax collections rose by 4.4 percent from the previous February to $203.8 million. Total tax collections were $549.8 million, up 9.4 percent from last February. Table 1 summarizes. (Click charts and tables for larger versions.)
February was the second month for the new sales tax rate on groceries. The previous rate was a uniform 6.5 percent on all retail sales. Starting January 1, the tax on groceries fell to 4.0 percent. Sales tax revenue nonetheless rose by 4.4 percent from February 2022, probably from the fact that inflation caused prices to rise.
For fiscal year 2023, which started on July 1, 2022 and ends with June 2023, total tax collections are higher by 9.2 percent over the previous fiscal year. Table 2 shows these figures.
Charts 4a and 4b compare 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 important 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 for this month: “Revenues have exceeded estimates for 30 out of the last 31 months — a clear sign that our efforts to make Kansas a place where businesses and families want to call home is paying off.” But this is not the only conclusion to draw. Exceeding estimates 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.
Governor Kelly Announces February Total Tax Collections Exceed Estimates by Nearly $37 Million The report from Kansas Legislative Research Department is on this page.