Legislative Research projects FY2026 receipts up slightly after a downward revision to FY2025

Eddie Pinner of Legislative Research presented the state's consensus revenue estimates to the Committee on Taxation, reporting a downward revision to fiscal year 2025 and a modest increase projected for fiscal year 2026.

The revised estimate for fiscal year 2025 was reported at $9.73 billion — a reduction of $59.8 million (0.6%) relative to prior estimates — with the taxes-only portion reduced by $72.2 million, a 3.5% decline from the prior year. For fiscal year 2026 the initial estimate presented was $9.845 billion, an increase of $114 million (1.2%) over the revised 2025 estimate.

Why it matters: These consensus figures (jointly produced by Legislative Research and the Division of the Budget) underpin budget planning and the state’s fiscal outlook. Changes in tax policy enacted in the regular and special sessions, reductions to the food sales tax, and tax credits tied to large projects were cited as primary drivers of year-to-year receipt changes.

Key revisions and drivers

- Individual income-tax receipts: revised upward by $113.8 million for FY2025 (a projected growth into FY2026 of about $200 million or 4.7%).

- Corporation income-tax receipts: revised downward by $211.5 million for FY2025; a modest projected increase of $10 million (0.7%) is included for FY2026, tempered by anticipated subsequent tranches of investment tax credits tied to the Panasonic Apex project.

- Sales and use taxes: combined upward revision of $47.1 million for FY2025, with near-zero growth projected into FY2026; long-term shift from taxable goods toward untaxed services was cited as a restraining factor.

- Non-tax receipts: revised up $12.4 million for FY2025 (driven largely by agency earnings / unclaimed property); a projected decline in nontax revenue of $99.4 million in FY2026 was tied to lower anticipated interest earnings and declining fund balances available for investment.

Pinner summarized the effect of recent tax-policy changes: the food sales tax changed to 0% on Jan. 1 (moving from 2% earlier in the fiscal year), and the special session enacted measures that together reduced State General Fund (SGF) receipts by significant amounts in the prior fiscal year. He emphasized that tax policy accounted for more than 100% of the year-over-year tax change and that without those policy moves receipts would have shown growth.

On the Apex project and corporate tax credits

Committee members asked whether additional Apex projects or second tranches of Apex-related benefits were still anticipated. Eddie Pinner replied that, per the office's incorporation into the November estimate, "there is not going to be a second Apex project. The Integra project isn't if it comes to fruition, is not going to come to fruition as an Apex project. And the Apex statute is closed." The office said estimates already reflect the absence of a second Apex project.

On withholding, K-4 forms and filing-season uncertainty

Pinner told the committee that the state will closely monitor filing behavior and withholding changes during the coming months. He noted that restructuring enacted in the special session included a significant change to the personal exemption and withholding tables, and that some employers (especially third-party payroll processors) implemented withholding-table changes on different schedules. That variation and the fact some taxpayers select "no exemptions claimed" on their K-4s could produce atypical timing for receipts (for example earlier or larger refund activity in February and shifts in January/April patterns).

Budget Stabilization Fund and interest earnings

When asked about the budget stabilization fund balance, Pinner said the fund balance is "less than $2,000,000,000 but more than $1,500,000,000." He clarified that interest on the budget stabilization fund remains in that fund and is not available to the State General Fund. He also highlighted that projected declines in available investable balances combined with anticipated lower interest rates explain much of the forecasted drop in nontax receipts for FY2026.

Methodology and timing

Pinner explained the consensus revenue process: the director of the budget (executive branch) and Legislative Research (legislative branch) jointly issue the revenue estimates (statutory deadlines referenced: early November for the fall estimate and an April meeting near April 20 for the spring estimate). The November meeting produced the revised FY2025 estimate and the initial FY2026 estimate; the April update will further refine those figures using tax-filing season data.

Questions and follow up

Representative Clark Sanders and other committee members asked about monthly vs. annual estimate precision; Pinner said the office devotes more effort to the annual consensus figures and that the staff chops those totals into monthly guideposts for tracking. Representative Phil Heisel asked several technical questions, including the size of the budget stabilization fund and the state’s tax-stamp collections for illegal drugs; Pinner supplied a rough range for the fund and noted the presence of unusual line items (tax stamps) in the detailed tables.

Ending: Pinner handed off additional materials in the committee S drive, including the long memo with tables (consensus receipts and economic forecast), a two-page year-to-date receipts memo through December, and the 2024 supplement to the Kansas Tax FAQs. He said staff will closely monitor filing-season receipts and return patterns and will present updated estimates at the statutory spring meeting.