Download Impact of Agriculture Prices on Sales Tax Revenue, House

Impact of Agriculture Prices on Sales Tax Revenue, House Agriculture Committee
January 17, 2017
The following graph depicts state
sales Assistant
tax (adjusted
for rateKansas
changes)
collections,
Josh Roe,
Secretary,
Department
of commodity
Agriculture and oil price indexes for
2006-2015 (final 2016 numbers not available until March 2017). Sales tax collections and these two indexes move in the
Thegeneral
following
graph depicts
state sales
(adjusted to
forpredict
inflationsales
and rate
collections,
commodity
and oil price
indexes
same
direction.
A model
wastax
generated
taxchanges)
collections
based on
these indexes
for the
statefor
and
2006-2015
(final
2016
numbers
not
available
until
March
2017).
Sales
tax
collections
and
these
two
indexes
move
in
the
same
general
select Kansas counties.
direction. A model was generated to predict sales tax collections based on these indexes for the state and select Kansas counties.
$2,200,000,000
$2,150,000,000
Adjusted* State Sales Tax,
Commodity Prices Index and Oil Price Index
(2006-2015)
120
100
$2,100,000,000
$2,050,000,000
80
SALES TAX
$2,000,000,000
$1,950,000,000
60
$1,900,000,000
$1,850,000,000
40
$1,800,000,000
$1,750,000,000
20
$1,700,000,000
$1,650,000,000
2006
2007
Real Sales Tax
2008
2009
2010
2011
Commodity Prices Index
2012
2013
2014
2015
0
Oil Price Index
Agricultural prices and sales tax receipts exhibit a positive and statistically significant relationship at the state level as well as a
Agricultural
and sales
tax receipts
exhibit
a positive
and statistically
significant
at theinstate
level as
majority ofprices
the counties
analyzed.
Specifically,
the model
concluded
that for every
1 percent relationship
decrease (increase)
agricultural
is a corresponding
$7,794,029
decrease
(increase)
state sales
tax receipts,
being
wellprices
as a there
majority
of the counties
analyzed.
Specifically,
thein
model
concluded
that all
forelse
every
1%equal.
decrease (increase) in
agricultural prices there is a corresponding $7,794,029 decrease (increase) in state sales tax receipts, all else being
Energy prices and sales tax receipts exhibit a negative, but statistically insignificant relationship at the state level. Intuitively, when the
equal.
negative relationship is apparent, higher energy prices can lead to lower purchases. However, in counties such as Ellis, with strong
agricultural and energy sectors, this relationship is positive and statistically significant.
Energy
prices and sales tax receipts exhibit a negative, but statistically insignificant relationship at the state level.
Intuitively,
negative relationship
is apparent,
higherprices
energy
leaddeclines
to lower
purchases.
However, in counties,
Applyingthe
the commodity
price index coefficient
to current
wasprices
used tocan
predict
in sales
tax revenue.
such as Ellis, with strong agricultural and energy sectors, this relationship is positive and statistically significant.
• The commodity price index peaked in April of 2014 at a value of 115.4. Average index value for 2016 is predicted at 90.
Applying
the commodity price index coefficient to current prices was used to predict declines in sales tax revenue.
• Using this model, 2016 sales tax collections are predicted to decline by $66 million compared to 2015 and $138 million
compared
to 2014.
 The
commodity
price index peaked in April of 2014 at a value of 115.4. Average index value for 2016 is predicted
at 90.
Using this model, 2016 sales tax collections are predicted to decline by $66 million compared to 2015 and
$138 million compared to 2014.
Kansas Department of Agriculture | 1320 Research Park Drive | Manhattan, KS 66502 | (785) 564-6700 | agriculture.ks.gov

Ellis County Adjusted* Sales Tax
Commodity Prices Index and Oil Price Index
(2006-2015)
Ellis County
Adjusted* Sales Tax
$40,000,000 Commodity Prices Index and Oil Price Index
(2006-2015)
$35,000,000
120
100
120
$35,000,000
$25,000,000
80
100
$30,000,000
$20,000,000
60
80
SALES TAXSALES TAX
$40,000,000
$30,000,000
$25,000,000
$15,000,000
$20,000,000
$10,000,000
40
60
$15,000,000
$5,000,000
20
40
$10,000,000
$0
$5,000,000
$0
2006
2007
2008
Real Sales Tax
2006
2007
*Adjusted for inflation and
rate changes
2009
2010
2011
2012
Commodity Prices Index
2008
Real Sales Tax
2009
2010
2011
2013
2014
2015
Oil Price Index
2012
Commodity Prices Index
2013
2014
2015
0
20
0
Oil Price Index
Crawford County Adjusted* Sales Tax
Commodity Prices Index and Oil Price Index
(2006-2015)
Crawford County
Adjusted* Sales Tax
$30,000,000 Commodity Prices Index and Oil Price Index
(2006-2015)
$25,000,000
120
100
120
80
$25,000,000
$15,000,000
100
60
$20,000,000
$10,000,000
80
40
$15,000,000
$5,000,000
60
20
$10,000,000
$0
40
0
SALES TAXSALES TAX
$30,000,000
$20,000,000
$5,000,000
$0
2006
2007
2008
Real Sales Tax
2006
2007
Real Sales Tax
2009
2010
2011
2012
Commodity Prices Index
2008
2009
2010
2011
Commodity Prices Index
2013
2014
2015
Oil Price Index
2012
2013
2014
2015
20
0
Oil Price Index
*Adjusted for inflation and rate changes
Kansas Department of Agriculture | 1320 Research Park Drive | Manhattan, KS 66502 | (785) 564-6700 | agriculture.ks.gov
Johnson County Adjusted* Sales Tax
Commodity Prices Index and Oil Price Index
(2006-2015)
Johnson County Adjusted* Sales Tax
$540,000,000Commodity Prices Index and Oil Price Index
$520,000,000
(2006-2015)
SALES TAX
$500,000,000
$560,000,000
$480,000,000
SALES TAX
$560,000,000
$500,000,000
$420,000,000
$480,000,000
$400,000,000
120
100
80
120
60
$540,000,000
$460,000,000
$520,000,000
$440,000,000
$460,000,000
$440,000,000
$420,000,000
100
40
80
20
2006
2007
2008
Real Sales Tax
2009
2010
2011
2012
Commodity Prices Index
2013
2014
2015
Oil Price Index
2006
2007
2008
2009
2010
2011
2012
2013
2014
40
20
*Adjusted for inflation and rate changes
$400,000,000
60
0
2015
Real
Sales Tax
Sedgwick
Sedgwick County Adjusted* Sales Tax
Commodity Prices Index and Oil Price Index
$350,000,000
(2006-2015)
$450,000,000
SALES TAX
$400,000,000
SALES TAX
Commodity
Prices Index Sales Oil
Price Index
County
Adjusted*
Tax
Commodity Prices Index and Oil Price Index
(2006-2015)
0
$300,000,000
$450,000,000
$250,000,000
$400,000,000
$200,000,000
$350,000,000
$150,000,000
$300,000,000
$100,000,000
$250,000,000
$50,000,000
$200,000,000
$0
$150,000,000
$100,000,000
$50,000,000
$0
2006
2007
2008
Real Sales Tax
2006
2007
Real Sales Tax
2009
2010
2011
2012
Commodity Prices Index
2008
2009
2010
2011
Commodity Prices Index
2013
2014
120
100
2015
Oil Price Index
2012
2013
2014
80
120
60
100
40
80
20
60
0
40
20
2015
0
Oil Price Index
*Adjusted for inflation and rate changes
Kansas Department of Agriculture | 1320 Research Park Drive | Manhattan, KS 66502 | (785) 564-6700 | agriculture.ks.gov