Kansas Senate budget chairwoman Carolyn McGinn said Tuesday the positive March revenue report ought to propel conversation about offering raises to state employees without signaling lawmakers to abandon fiscal restraint.
Individual income tax and retail sales tax revenue exceeded expectations in March to close out the third quarter of the fiscal year with collections 5 percent above the forecast. So far, the state has brought in $140 million more than after nine months of the previous fiscal year.
"We've still got lots of things to address," said McGinn, the Sedgwick Republican leading budget negotiations with the House. "This (revenue report) is good news, especially in light of trying to give employees a pay raise."
The House version of a proposed state budget contained a 2.5 percent pay hike for state workers, while the Senate budget didn't contain a salary enhancement.
The Kansas Department of Revenue reported the state had collected $4.82 billion during the fiscal year, which was 0.48 percent above the consensus prediction by a group of economic, budget and finance experts. There are three months remaining in the fiscal year, but the Legislature won't finish work on the new state budget until May.
"Total tax receipts for the fiscal year are on track with estimates as we go into the final quarter," said Mark Burghart, secretary at the Kansas Department of Revenue.
For the first time since July 2018, state sales tax receipts for the month outperformed the estimate, coming in at $176.5 million during March. That was $3.5 million above the projection.
Individual income tax collections were $20.9 million above the March forecast for a total of $230.9 million. In March, corporate income tax revenue dipped 9 percent to $24.4 million, a shortfall of $2.1 million.
Rep. Kathy Wolfe Moore, the top Democrat on the House Appropriations Committee, said legislators ought to adhere to Gov. Laura Kelly's strategy of targeted investment in state agencies and avoid tax legislation capable of draining the treasury.
"We're always happy when revenue increases. We still need to be very cautious and conservative with our spending and balance that with appropriate spending in agencies that have been decimated," said Wolfe Moore, of Kansas City, Kan.
The House and Senate could consider budget bills before adjourning Friday for three weeks. However, the final state budget for the fiscal year starting July 1 won't be resolved until legislators return to Topeka on May 1.