Consensus revenue estimate shows lower 2025 receipts as tax changes shift timing and sources of revenue

Legislative Research analyst Eddie Pinner told the Kansas Senate Tax Committee that the consensus revenue estimate was revised downward for fiscal year 2025, with total state general fund (SGF) receipts now projected at $9.73 billion. He said the downward revision “is largely attributable to tax policy changes” enacted in recent legislative sessions and to timing effects from those changes.

The change matters because the consensus estimate is the baseline the Legislature and governor use to plan budgets. Pinner explained the consensus process — joint estimates produced twice yearly by legislative research and the governor’s Division of the Budget — and said the next formal revision will be finalized in April when the group meets on April 17 this year because April 20 falls on a Sunday.

Pinner summarized the numbers for lawmakers: actual SGF receipts for fiscal 2024 totaled about $10.10 billion; the revised estimate for fiscal 2025 is $9.73 billion with tax receipts of $9.65 billion; and the initial estimate for fiscal 2026 rises modestly to about $9.85 billion. On individual tax lines, the forecast showed a projected 4.7 percent increase in individual income tax in 2026 (after an earlier drop), continued declines in retail sales taxes, and growth in compensating use taxes tied to online sales.

Pinner said the most significant drivers are a set of bills enacted since 2021. He identified five major pieces of legislation that, in aggregate, materially change state receipts: 2021 Senate Bill 50 (decoupling from some federal tax provisions), 2022 HB 2106 (food sales tax reduction), 2022 HB 2239 (a taxation omnibus that included a residential property exemption tied to the statewide 20‑mill levy), 2022 SB 347 (the Apex/Panasonic package), and a special‑session tax bill enacted last summer. He noted the special session measure reduced SGF receipts by an estimated $416.3 million in 2025 and $327.4 million in 2026 because the statute applied retroactively to Jan. 1, spreading its impact across tax years.

On Apex and Panasonic specifically, Pinner detailed two revenue‑impacting provisions: a refundable investment tax credit tied to Panasonic’s qualifying capital expenditures and a 0.5 percentage point corporate income tax rate reduction that applies to all Kansas C corporations. Pinner said the 2024 estimate’s $30 million figure reflected the corporate rate reduction’s partial year impact and that the investment tax credit to Panasonic had not been claimed as of the end of 2024. “Panasonic’s corporate tax return for the state of Kansas is confidential,” Pinner said, explaining the state cannot publicly report whether the cost will appear as reduced corporate liability or as refundable checks to the company.

Committee members asked how large the Apex-related impacts might grow; Pinner said the state expects one more increase around 2027 as investment tax‑credit claims are phased in, then a leveling and eventual drop as credits are fully claimed in later years. He also said supplier agreements under Apex had not been executed as of the briefing, so supplier credits were not included in the current estimates.

Pinner cautioned lawmakers about reading too much into monthly variances. The consensus group breaks annual estimates into monthly pieces for transparency, but he said those monthly figures are less precise and subject to timing distortions. Through December, fiscal‑year‑to‑date receipts were $65 million ahead of the estimate, with $41 million of that coming from tax receipts and nearly all of that on the corporate income‑tax side because December includes the last corporate estimated payment.

Pinner also explained technical drivers of year‑to‑year changes: the SALT parity approach enacted in 2022 shifted some receipts from individual to corporate tax lines and accelerated timing by moving revenue into estimated payments; changes to the statewide 20‑mill school levy (part of HB 2239) shifted some local residential property‑tax burdens onto the SGF; and the food sales tax reduction directly lowered retail sales tax receipts. He told the committee that, using the criteria the research office applied, the combined fiscal impact of these major bills increases SGF fiscal exposures materially in the 2024–2026 window.

Pinner closed by noting an accounting item: the budget stabilization fund’s interest accounting produced a one‑time $23.6 million uptick in non‑tax SGF receipts in December; he did not expect that to be a recurring boost. He said the consensus estimating group will publish the short memo with the April numbers on the statutory schedule and the long memo with detailed tables shortly thereafter.