The April Consensus Revenue Estimate was released to the Governor and the Legislature on April 24th.
The report is developed each year in November and April to assist the Legislature in the budgeting process.
The bipartisan report is developed by the Division of the Budget, the Legislative Research Department, the Department of Revenue, and three consulting economists from state universities.
The estimate was increased by $19.9 million for fiscal years 2013 and 2014 relative to the previous estimate made in November.
The report included the following economic forecast for Kansas:
1. The nominal Kansas Gross State Product is expected to grow by 3.8% in 2013 and 4.1% in 2014. The only modest improvement is due to slow employment growth, drought conditions for the agricultural sector, and the uncertainty of federal government fiscal policies.
2. Kansas Personal Income (KPI) is expected to increase by 3.1% in 2013 and 4% in 2014. This compares to projected U.S. Personal Income Growth (USPI) of 3.2% in 2013 and 4.7% in 2014.
3. Employment- The most recent data from February of 2012 to February of 2013 showed private sector employment increasing by 15,400 jobs with the largest gains in professional and business services; trade, transportation and utilities; and manufacturing. The overall Kansas unemployment rate, which was 5.7% in 2012 is expected to decrease to 5.2% in 2013 and 4.9% in 2014. The U.S. unemployment rate is projected at 7.4% in 2013 and 6.9% in 2014.
4. Agriculture- Drought conditions continue to plague the Kansas Ag sector. The latest soil moisture report indicated subsoil moisture supplies as of early April were rated short or very short in 77% of the state. Hopefully recent rains have improved this situation. Average crop prices for March were significantly higher than March of 2013 and higher cost of feed and draught conditions have been responsible for a reduction in livestock and hog inventories in our state.
5. Oil and Gas- Kansas is forecast to produce 44.5 million barrels of oil in 2013 and 49 million barrels in 2014. Substantial growth in Gross oil production is projected for the future with increased drilling activity in South Central Kansas. The average price per barrel is down by $2.00 due to weaker U.S. and world demand coupled with increasing domestic production. Kansas natural gas production has declined significantly in recent years from a high of 730 million cubic feet in 1996 to a projection of 295 million in 2013 and 285 million in 2014.
6. Inflation Rate- Inflation will likely be held in check with the projection of 1.9% in 2013 and 2.1% in 2014 down from the November projection of 2.1% in 2013 and 2.2% in 2014.
The Consensus Report is helpful in gaining a better understanding of our Kansas economy. From a legislative prospective it was good to see even a small increase in projected tax revenue.
As a footnote this report was prepared on April 19th prior to receiving the April tax revenue numbers.
It was encouraging to see an increase of $40 million dollars in tax revenue over April of 2012. It will certainly be interesting to see if this trend continues.
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