Will Kansas explode its budget again?

Republicans in the Legislature have a plan to cut state income taxes for some businesses and people.

They say it’s an economic development issue.

It’s not.

They say it’s a fairness issue.

It’s not.

It is instead another effort to appease special interests by sacrificing fiscal stability.

Senate President Susan Wagle is so enthusiastic about the effort that she named a special committee to push through legislation, and then named herself to lead it.

The big rush to cut state revenue is happening even as Republicans insist that Democrat Gov. Laura Kelly needs to act prudently on spending issues. Many GOP leaders argue the state can’t afford to expand Medicaid or increase funding for education.

Concerns about Kansas’ finances are legitimate. The state can’t afford to increase spending without knowing with some certainty how it will pay for those increases.

Similarly, the state can’t afford to cut taxes without knowing how lawmakers will compensate for that loss.

Legislative leaders should have learned that from the crisis they helped create with their 2012 tax cuts.

At the urging of former Gov. Sam Brownback, the Legislature cut state income tax rates for most taxpayers and eliminated state income taxes entirely for hundreds of thousands of businesses.

The GOP promised its plan would produce an economic revival in the state. Instead, Kansas saw its economy falter, even as the national economy picked up steam.

It’s not that the tax cuts caused the state’s economic troubles. It’s that the tax cuts did nothing to buoy Kansas’ fortunes as the agriculture and energy sectors were sinking.

The cuts were ineffective as a means of boosting the economy. They did, however, blow a huge hole in the state’s budget.

The tax cuts did help create staffing crises at state prisons and state hospitals. They did lead K-12 schools to close early and to cut services and staff. They did make college less affordable. And they did prompt the delay or cancellation of highway safety projects.

Even after slashing programs and services, the state was unable to pay its bills. So it had to borrow more. Kansas increased its debt by 40 percent in four years, according to a recent article in the Topeka Capital-Journal.

Finally, in 2017, the Legislature changed course. It restored the state income tax, but at lower rates.

Kansas is still struggling to recover, which is why it’s puzzling that so many legislators are ready to blow up the budget yet again.

The companies and people who would benefit from the new tax breaks are those who most benefited from federal tax cuts that went into effect in 2018. They want Kansas to maximize their tax savings by syncing up state and federal tax laws.

Kansas isn’t the only state dealing with the issue. In Arizona, Republican Gov. Doug Ducey vetoed what supporters dubbed “windfall” legislation, calling it hasty and irresponsible.

But Kansas’ GOP leaders argue it’s a fairness issue.

“Giving the federal tax relief windfall back to Kansas taxpayers is a matter of fairness. It’s really the people’s money and legislators have no right to expand government even more on the backs of hard-working Kansans …” said Dan Hawkins, House majority leader, in one of several tweets defending GOP tax strategy.

If it’s fairness the GOP wants – and if the state can afford to cut taxes – then reduce sales taxes on groceries.

Kansas’ income tax burden on companies is pretty much in the middle of the pack. But the state has one of the highest taxes on groceries in the country.

Most states cut families a break on sales taxes on groceries. Not Kansas, and in 2015, the Legislature actually raised sales taxes even higher as it flailed about for ways fill that huge budget hole it created.

No tax hits harder for struggling Kansas families.

Sadly, Kansas can’t afford to eliminate the sales tax on food. It can’t reasonably reduce any taxes without finding replacement revenue from other sources, say taxes on online sales or sports gambling.

Lawmakers need to move with caution, both on the spending and the tax-cut fronts. It’s going to take years to restore fiscal stability to a state that sacrificed responsible governance for political gimmickry.

 

One comment

  1. Jim Regan · February 12, 2019

    Thanks, Julie. Well said. Amazing, yet not surprising, that KS Republican legislators continue to tow the line for those (few) who keep them in office($.). Wagle, the handmaiden of Kochs & ALEC, is true to form.

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