A new study by the Washington-based Center for Budget and Policy Priorities is sharply critical of the Kansas tax cuts in 2012 and 2013 passed by the legislature at the urging of Gov. Sam Brownback....
“Kansas is a cautionary tale, not a model,” the report says. “Kansas’ huge tax cuts have left that state’s schools and other public services stuck in the recession, and declining further — a serious threat to the state’s long-term economic vitality.
“Meanwhile, promises of immediate economic improvement have utterly failed to materialize.”
■The large revenue losses extended and deepened the recession’s damage to schools and other state services. Most states are restoring funding for schools after years of significant cuts, but in Kansas the cuts continue. Governor Sam Brownback recently proposed another reduction in per-pupil general school aid for next year, which would leave funding 17 percent below pre-recession levels. Funding for other services — colleges and universities, libraries, and local health departments, among others — also is way down, and declining.
■The tax cuts delivered lopsided benefits to the wealthy. Kansas’ tax cuts didn’t benefit everyone. Most of the benefits went to high-income households. Kansas even raised taxes for low-income families to offset a portion of the revenue loss; otherwise the cuts to schools and other services would have been greater still.
■Kansas’ tax cuts haven’t boosted its economy. Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. The earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well. (An exception is farmers, whose incomes improved as the state recovered from a drought.) And so far there’s no evidence that Kansas is enjoying exceptional business growth: the number of registered business grew more slowly last year than in 2012, and the state’s share of all U.S. business establishments fell over the first three quarters of last year, the latest data available.
■There’s little evidence to suggest that Kansas’ tax cuts will improve its economy in the future. No one knows for certain how Kansas’ economy will perform in the years ahead, but it isn’t likely to stand out from other states. The latest official state revenue forecast, from November 2013, projects Kansas personal income will grow more slowly than total national personal income in 2014 and 2015.[1]
“Over the last four years we’ve had to cut $45 million out of budget,” said Dr. Lane. “We are really at bare bones of resources that we need. In order to move our kids forward. That translates into 150 teachers that were cut, and 400 other positions that had to be cut out of our district.”
According to district officials, over 80 percent of the district’s students live in poverty. But despite those challenges, reading scores in the district have risen 2,300 percent since 1996, and math scores are up 600 percent. However, Lane says that proposed changes in how Kansas schools are funded pose a real threat to making her students ready to compete in the real world.
Kansas Gov. Sam Brownback has proposed maintaining current levels of state funding for all schools, but Dr. Lane says that the money KCK schools get is equivalent to what they received in 1996. The governor’s plan also includes eliminating extra aid for kids who don’t speak English – in the KCK School District, there are over 8,000 students now learning English as a second language.
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Kind of misleading. It says Missouris rate is 3.75 (1.5-6%), but the 1.5% rate is for anyone making less than $900/year. It jumps up very quickly to the 6% rate. Missouri has a much higher rate for middle class workers and Kansas will be dropping their rate to zero over the next few years.
MO Legislature overrides Gov. Nixon's veto and enacts a $620 million tax cuts. Rates to lower in 2017, and it will include a business-income deduction on personal tax returns. MO at least has a proviso that rates only lower if revenues continue to grow, unlike in KS where they slashed rates and now there is a huge hole in the budget.
Kansas has a problem. In April and May, the state planned to collect $651 million from personal income tax. But instead, it received only $369 million.
In 2012, Kansas lawmakers passed a large and rather unusual income tax cut. It was expected to reduce state tax revenue by more than 10 percent, and Gov. Sam Brownback said it would create “tens of thousands of jobs.”
In part, the tax cut worked in the typical way, by cutting tax rates and increasing the standard deduction. But Kansas also eliminated tax on various kinds of income, including income described commonly — and sometimes misleadingly — as “small-business income.” Basically, if your income results in the generation of a Form 1099-MISC instead of a W-2, it’s probably not taxable anymore in Kansas.
here was a windstorm of hasty excuses in recent weeks after Kansas reported that it took in $338 million less than expected in the 2014 fiscal year and would have to dip heavily into a reserve fund. Spending wasn’t cut enough, said conservatives. Too many rich people sold off stock in the previous year, state officials said. It’s the price of creating jobs, said Gov. Sam Brownback.
None of those reasons were correct. There was only one reason for the state’s plummeting revenues, and that was the spectacularly ill-advised income tax cuts that Mr. Brownback and his fellow Republicans engineered in 2012 and 2013. The cuts, which largely benefited the wealthy, cost the state 8 percent of the revenue it needs for schools and other government services. As the Center on Budget and Policy Priorities noted, that’s about the same as the effect of a midsize recession. Moody’s cut the state’s debt rating in April for the first time in at least 13 years, citing the cuts and a lack of confidence in the state’s fiscal management...
“Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy,” he wrote in 2012. “It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business.”
But the growth didn’t show up. Kansas, in fact, was one of only five states to lose employment over the last six months, while the rest of the country was improving. It has been below the national average in job gains for the three and half years Mr. Brownback has been in office. Average earnings in the state are down since 2012, and so is net growth in the number of registered businesses.
Hasn't that been the headline out of Wichita for 30 years.
Just imagine what would happen if Boeing and Sprint pulled a huge swath of employees out of the state all at once. If history is any indication, it will not be without some last ditch overture to give millions in tax-payers' money to them with no strings attached. I am going to start a company called Veruca Salt, LLC. We will specialize in threatening to leave and profiting from STAR bonds. Our tax break rewards will be split amongst the untaxed ownership. None of us will live in Kansas, though we will constantly promise to be bringing 500 or more jobs into the state.
Hasn't that been the headline out of Wichita for 30 years.
Just imagine what would happen if Boeing and Sprint pulled a huge swath of employees out of the state all at once. If history is any indication, it will not be without some last ditch overture to give millions in tax-payers' money to them with no strings attached. I am going to start a company called Veruca Salt, LLC. We will specialize in threatening to leave and profiting from STAR bonds. Our tax break rewards will be split amongst the untaxed ownership. None of us will live in Kansas, though we will constantly promise to be bringing 500 or more jobs into the state.
Securities regulators have filed fraud charges against the state of Kansas Monday, alleging bond offering documents failed to disclose the risks to investors from the state's underfunded pension system.
Republican legislators in Kansas are tossing around plenty of proposals for raising new revenues to help close the state’s budget shortfalls, and they’re not confining themselves to rethinking personal income tax cuts that represent GOP Gov. Sam Brownback’s legacy.
But many lawmakers floating the ideas also aren’t expressing much enthusiasm for them.
Several Republican leaders said the GOP-dominated Legislature must make significant spending cuts to shrink shortfalls totaling more than $710 million in the current budget and the budget for the fiscal year beginning in July. Key senators also said they want to avoid measures – such as reversing cuts in income tax rates or raising the state’s sales tax rate – that clearly can be labeled as tax increases.
"I want these things to come through the legislative branch because that's constitutionally the way they're supposed to," Brownback said. "We're in the situation we are, and I dealt with it, but I wanted to do it in as minimally intrusive of a fashion as possible."
Kansas Gov. Sam Brownback is taking his tax-slashing message on the road, with two speaking events in Missouri to groups funded by St. Louis billionaire and conservative megadonor Rex Sinquefield.
Wednesday afternoon, Brownback addressed a luncheon sponsored by Grow Missouri, a Sinquefield-funded group founded two years ago to push lawmakers to enact tax cuts for individuals and businesses in the state. The title of the luncheon was “Growing Prosperity for Years to Come,” and Grow Missouri tweeted that Brownback would discuss “his tax policies and how we can adopt them.”
