The issue: State officials got some good news in August — state revenues jumped last month.
Our View: Officials shouldn’t get too excited about the monthly revenue report, because experts suspect numbers will drop again.
State sales tax receipts jumped in August raking in almost $17 million more than anticipated. Members of the Kansas Legislature are likely cheering with the hope that the increase in revenue means an easier budget-building session come January.
The monthly report from the Kansas Department of Revenue showed the state collected $436.4 million in August, up 5.4 percent from the same month last year.
The state’s retail sales collections topped estimates by more than $7.2 million in August, while individual income taxes brought in $3.4 million more than expected.
Anyone casually reading the monthly revenue report would think happy times are just around the corner.
As college football ESPN commentator Lee Corso would say, “Not so fast, my friend.”
Analysts suspect the better-than-expected numbers are temporary based on one-time spending boosts related to back-to-school purchases and flood damage repairs.
In upcoming months, tax revenues could plummet.
According to an economic survey released by Creighton University economists, the Kansas economy is likely to shrink in upcoming months. The university’s Kansas Business Conditions Index, which is based on supply managers’ expectations, revealed that their outlook for the next three months dropped from 54.7 in July to 43.6 in August.
That’s not good news for a state economy that continues to struggle.
Only time will tell whether tax revenues will be bolstered in the near future.
We caution legislatures and other power players in Topeka not to promise additional spending or fewer cuts in next year’s budget based on August’s stellar revenue reports.