The States which make up the United States of America are, famously, the laboratories of democracy, and Kansas is another state electing officials who hew to the Republican orthodoxy: cut taxes and watch the resultant prosperity generate more than enough revenues to cover the resulting budget deficit. Or, as former Kansas Budget Director (12 years, 3 governors) Duane Goossen puts it on The Kansas Budget blog:
The selling point for hefty Kansas tax cuts was irresistibly seductive. Kansas can lower income tax rates, exempt business profits from the income tax entirely, and state revenue will still remain the same, or maybe even grow, and the state economy will prosper.
But this premise proved to be completely false. General fund revenue did not replenish. It fell $700 million (11 percent) in one year, and the recently revised official revenue forecast now predicts that receipts will stay at that low level into the future. Nor did the economy prosper. The Kansas economy is plodding along, but growing at a rate below our surrounding states and the national average.
Peter Roff at USNWR wishes to disagree concerning Kansas, Paul Krugman, and appears to be ignoring the Louisiana story as well:
Then there’s Kansas, where Republican Gov. Sam Brownback has put the state on the path to abolishing its income tax. It was a bold move, one that required him to recruit candidates to run for the state legislature against members of his own party in order to get the votes to do it.
He won the policy battle and – if he wins re-election – he’s established a model other Republicans can and no doubt will follow going forward.
This, of course, is the most dangerous development of all. The modern Democratic coalition is based on the idea that the revenue the government collects will be spread around among its constituent political parts. It’s a kind of “share the wealth” program on steroids that allows for everyone to get along because no one walks away from the table without their share of the vigorish, which justifies the amount of money that the unions, the environmental groups, the trial lawyers and the civil rights groups take from their members to get Democrats elected in the first place.
If Brownback triumphs, the pie shrinks – which means there just won’t be as much taxpayer money to divide up in the future. So the Democratic coalition groups have to win and make sure no one ever tries to abolish a tax again, even if they have to stretch the truth to do it.
The article is somewhat old, so perhaps he’s since revised his thinking. The Atlantic has published this:
The yawning deficit is widely blamed on the deep income tax cuts that Brownback, along with a Republican legislature, enacted during his first two years in office. They not only slashed rates, but more importantly, they created a huge exemption for business owners who file their taxes as individuals. By Brownback’s own description, the tax plan was a “real live experiment” in supply-side economics, with the idea being that lower taxes would spur investment, create jobs, and refill Kansas’s coffers through faster growth. Yet even under the most charitable analysis, revenue has plummeted much faster than the economy has expanded.
So how are the anti-tax pledges doing? The Wichita Eagle has the low-down:
Gov. Sam Brownback, who pushed for those deep income tax cuts, wants fellow conservatives to ignore the no-new-tax pledges many of them have made since 2012.
He proposed higher taxes on cigarettes and alcohol, an idea that has been coolly received in the Legislature. The governor’s budget also depends on a $136 million tax increase on health maintenance organizations.
Leading lawmakers have entertained their own ideas, including increases in sales or gas taxes or a tax on “passive income,” including earnings from rent.
Another proposal would close a loophole that lets wages go untaxed for owners of limited liability companies, sole proprietorships and the like. Although income from those businesses was supposed to be tax-free, the wages paid from that revenue were always still intended to be taxed, lawmakers said.
But efforts to raise taxes run headlong into opposition from conservatives who ran for office touting anti-tax credentials.
About of a third of the 125-member Kansas House has signaled an unwillingness to raise taxes when revenue falls short of spending. Almost half of the 40-member Kansas Senate is on record as opposing new taxes.
The article goes on to note that some members are ready to toe the line, while the others are having an unhappy meeting with reality. The New Republic notes that Kansas’ reserve fund is becoming depleted:
On Tuesday, Brownback signed legislation that would balance the budget by diverting money from other funds, particularly one for highway projects, to the general fund. It would also reduce contributions to pensions for teachers and government workers, pushing those costs into the future. It’s a deeply irresponsible budget that hides the costs of the tax cuts with short-term patches. But this is just the beginning: Kansas faces a projected $600 million budget shortfall in the 2016 fiscal year—and now there is no money in the reserve fund to cover any of it.
Mother Jones has a nice, if partisan article, subtly entitled, “Kansas Is Totally Screwed“, concerning the general situation and, in particular, education. Kansas’ constitution guarantees an adequate education, but ….
The [state Supreme] court said the government had failed to allocate enough money for its students, and the justices tossed the decision back to a lower panel to determine what exactly would constitute a sufficient level of spending. Last week, that lower court ruled that funding for students “is inadequate from any rational perspective of the evidence presented or proffered to us.” The three-judge panel held that per pupil spending should be between $4,654 and $4,980 per year. Either number would be a huge jump over the $3,852 per student that the state currently spends.
The current Kansas Budget Director Shawn Sullivan was sent to warn recalcitrant lawmakers, KMBC-TV notes:
Kansas would likely be forced to lay off prison guards, cut aid to public schools and reduce payments to health care providers and nursing homes if legislators don’t increase taxes, Republican Gov. Sam Brownback’s budget director told GOP lawmakers Monday.
Budget Director Shawn Sullivan said that without tax increases, the most likely option for Brownback is cutting $400 million from a budget approved by legislators for the fiscal year beginning July 1, to avoid a deficit. He said the cuts would most likely be a 6.2 percent across-the-board reduction in their state funds, taking effect in late July or early August.
From The Atlantic article, we get a response from Brownback:
And like any politician on the ropes, he is preaching patience. “These things take time,” he said last month. He also acknowledged the toll his stumbles have taken on his image. “We’re in Lent season, so I’m giving up worldly things, like popularity,” he joked to a small crowd. Brownback has blamed the budget shortfall in part on automatic increases in education spending (a subject of a long-running court dispute), and he’s cited a recent uptick in job growth as evidence that the tax cuts, on the whole, are working. “Kansas is on the rise, and the state of our state is strong,” the governor proclaimed in an annual budget address in January.
Finally, this is surely enlivening discussions at Traditional Republicans for Common Sense. From their “About Us” section:
Kansas has always been about the people, about doing what’s right and about putting others first. Radical elements and extremist politicians may have taken over our process, but it’s not too late to take it back from them. We must. And, together, we will continue to ensure that Kansas is the best place to live, work and raise a family.
Nice to see some of the old-line Republicans resent the ideologically bound amateurs that have pushed them aside.
