New revenue projections give Kansas a $3.1 billion surplus as governor pushes for food sales tax cut

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TOPEKA — A revised economic forecast for Kansas predicts the state will collect $407.8 million more than projected in the next fiscal year, adding to a budget surplus that could be used to eliminate the $6 sales tax. .5% on food.

Governor Laura Kelly, a Democrat seeking re-election this year, has made the elimination of the food sales tax a cornerstone of her campaign. Republicans have favored an approach that would phase out the tax over several years, as long as revenue numbers remain high, while considering other potential tax cuts and criticizing the governor for vetoing a tax package he three years ago.

The new revenue estimate, which is tempered by inflation and includes all the legislation already signed by the governor, shows the state would have a surplus of $2.7 billion in July and a surplus of $3.1 billion. dollars in another 12 months. Eliminating the sales tax on food would reduce revenue by approximately $402.5 million.

“I can’t walk out of this room without doing another take, especially with inflation, that this reaffirms the Governor’s position that we can clearly immediately repeal the entire food sales tax at the state level. Kansas Grocery Status as of July 1. said Adam Proffitt, the state budget director, at a press conference Wednesday at the Statehouse. “These numbers put enough in the cushion there.”

The Consensus Earnings Estimates Group, made up of state analysts and academic economists, produced the revised forecasts. The projections reflect spikes in oil and gas prices, payroll growth constrained by the limited pool of available workers, difficulties in the manufacturing sector and an expected reduction in net farm income.

“The good news is that, even with inflation as high as it is now, Kansas state real GDP is expected to be well into positive territory,” Proffitt said. “So a lot of good things are happening in the Kansas economy. A lot of people are working. A lot of people are making money.

Projected surpluses include the budget and tax bills the governor recently signed off on, as well as school funding obligations the legislature has yet to pass. A potential transfer of $1 billion into the state pension system is not part of the equation.

Lawmakers will return to Topeka on Monday to wrap up work in the current legislative session, which includes finalizing the state’s spending plan and considering an assortment of tax cuts.

Kelly appeared at the Jamboree Foods in Norton, just south of the Nebraska border, on Wednesday to tout her plans to “remove the tax” on food.

“Kansans are finding relief from inflation on groceries by traveling to our neighboring states, and that’s unacceptable,” Kelly said. “This trip to save is hurting our Kansas businesses and making it difficult for local stores to stay open. Eliminating the state grocery tax would keep that money in the Kansas economy.

Republican Attorney General Derek Schmidt, who is running against Kelly in this year’s gubernatorial race, said the governor “wasn’t candid” about the impact of his veto of the legislation in 2019 that included a phased reduction state sales tax on food. The bill included significant tax breaks for multinational corporations and other tax provisions.

“I would have signed this bill, and as a result, Kansans would already have some relief from Joe Biden’s runaway inflation at the grocery store,” Schmidt said. “Once again, the Legislature must clean up Laura Kelly’s mess.”

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