January 7, 2016
Kansas’ tax amnesty program snagged $23 million this fall, short of lawmakers’ hopes.
Collection figures show the program came up about $7 million short of the Legislature’s expectation it would generate $30 million for the state.
The Legislature and Gov. Sam Brownback passed the amnesty program this past spring as part of a massive revenue package to raise $400 million to balance the state budget.
The program ran Sept. 1-Oct. 15. The Kansas Department of Revenue had at one point predicted it would have collection figures by mid-November, but in early December, an agency spokeswoman told the Associated Press the department was still processing paper amnesty applications.
Neither Brownback’s office nor the Department of Revenue have publicly announced the amnesty collections. But Senate Minority Leader Anthony Hensley, D-Topeka, provided the numbers to The Topeka Capital-Journal on Wednesday.
Separately, the House Tax Committee chairman, Rep. Marvin Kleeb, R-Overland Park, said Thursday it was his understanding the amnesty program collected about $23 million. Kleeb said he believed the program was successful, despite falling short of the estimate.
“I just think it’s another example of budget mismanagement by the Brownback administration,” Hensley said. “They came in with an estimate that was too high and now we’re suffering the consequences as a result.”
Approached for comment, the governor’s office did not dispute the figures provided by Hensley.
“The tax amnesty collection program has successfully collected millions of dollars in delinquent and outstanding owed taxes,” Brownback spokeswoman Eileen Hawley said.
Hensley said the less-than-expected haul potentially adds up to $7 million to the state’s budget shortfall. But Hawley said the collections had already been calculated into recent revenue projections.
The state has been skating on a razor-thin ending balance, now likely in the red by several million even if Kansas meets revenue expectations for the rest of the fiscal year.
By far, the amnesty program collected the most in corporate income taxes, gathering about $17.5 million. About $4.2 million was collected in individual income taxes.
The program received $890,768 in sales taxes, $221,160 in withholding taxes and $103,165 in retailer’s use taxes. The program collected $85,411 in consumers use tax.
All other collections from amnesty numbered in the low thousands.
The revenue department described the amnesty program as a “fresh start” for taxpayers. Individuals and businesses owing back taxes got to pay up without penalties or interest. In exchange, the state got a boost of revenue.
Kansas held its last tax amnesty program in 2010.
It’s not a tool that can be used often. Annie McKay, director of the Kansas Center for Economic Growth – which has been critical of the state’s tax policies – compared amnesty to taking change out of a penny jar. Once it’s empty, the jar doesn’t fill up again quickly.
“It’s really a measure of desperation. You see it most typically used during periods of economic downturn or recession,” McKay said.
Hensley said he was not opposed to the amnesty program itself.
“It’s been recommended by other secretaries of revenue, so no, I don’t fault the administration for trying to establish the policy. Where the fault lies is they just had a greater estimate than they probably should have gone with,” Hensley said.
Word of the results of amnesty come as Brownback is set to deliver the State of the State address this coming Tuesday. He’s expected to lay out budget adjustments soon after. With the exception of November, revenue has missed expectations each month of the fiscal year.
Figures released earlier this week showed the state took in $27 million less in tax revenue than expected in December.
In November, officials slashed Kansas revenue projections for the current fiscal year by $159 million, prompting budget cuts and fund transfers to keep the state in the black.
Read more from the Topeka Capital Journal here.