Kansas has a tax problem. Estimated revenues for the state are almost never met. Every month, what little budget there is gets undercut by shockingly low income. If the state does not take in enough in taxes to meet its obligations, who is to blame? Who owns the tax problem?
In 2012, the Kansas Legislature passed a tax cut "experiment," one that Governor Brownback characterized as a shot of adrenaline for the Kansas economy. They cut taxes on small businesses, with the notion that those businesses would reinvest the savings, and that their growth would lead to hiring more employees. Businesses, and workers, would flock to Kansas, and the resulting economic tide would float all boats.
Instead, in the wake of these cuts, Kansas has limped along, it's economic numbers stagnant or paltry, falling behind both regional and national indicators. Pick your metaphor: revenue has crashed, cratered, and/or fallen off a cliff. Yes, compared to the recession in 2008, Kansas is doing better than it was. But our neighbors, and the country as a whole, are doing much better than we are. Our economic recovery is being held back by limited revenue.
Last year, faced with a bottomless budget hole that had exhausted every attempt to sweep and borrow and steal funds from transportation, pensions, or children, the Kansas Legislature, with the approval of the Governor, finally raised taxes.
It was the largest tax hike in Kansas history.
But it was not a restoration of the lost tax revenue that started this problem. No, it was a new and dramatic increase in sales tax. Brownback and his allies lowered income tax (to zero) for roughly 300,000 business owners, and followed it up with a dramatic sales tax hike on every Kansan. Not to put too fine a point on it, but while many doctors, lawyers, realtors and other business owners are enjoying a tax break, families buying baby food now pay more.
This is the Brownback economic plan. Cut taxes on the few, and raise taxes on everyone to make up for it. As Marketwatch put it last June, "The end result is that the wealthy get to keep their tax cuts and everyone else gets to close the gap."
So how have Brownback's tax increases gone? Every month since he raised taxes, the state has missed revenue forecasts. Every month, sales taxes have been lower than forecast. Every month except one, November, 2015, ostensibly because the Royals won the World Series. At best that can only happen once a year (or once every 30).
So they missed their target? What does that matter?
It matters because the state plans its budget around these forecasts. And when the targets are missed, when the state has less money than they anticipated, budgets have to be cut. In most cases, they can cut next year's budget. But in some cases, they have to cut this year's budget, even as those budgets are still being spent.
Case in point. Kansas missed revenue forecasts last month by $53.7 million. The cuts and sweeps and legerdemain by the Governor in January resulted in an estimated $6 million surplus at the end of the state's fiscal year, in June. But this February miss puts Kansas in the hole in June by about $47 million. And we still have March, April, May, and June to go. Not to mention, the Kansas Supreme Court has required the state to fix the inequity in public school funding, also by the end of June.
So far, Brownback has ordered a cut of $17 million from Kansas colleges and universities, to go into effect immediately. There are some calls from the most radical of his supporters to sweep any "rainy day" funds public school districts may be holding. Others are suggesting that, rather than adding funds to schools to solve the equity problem, money should instead be shifted from adequately funded schools to those in need.
This is a problem that was created by the tax cuts in 2012. It is a problem of our own making. It can be laid at the feet of our Governor, who signed them and continues to support them at every turn. And it can be laid at the feet of the legislators who continue to vote for cuts and sweeps and risky bond borrowing.
Brownback is not up for re-election.
But every legislator in the Kansas Statehouse is.
When the sales tax was raised last session, many legislators indicated that it would be temporary, that it would be repealed this session. A short term fix, just to get the state through, they said. But as the year has progressed, and revenue estimates keep being undercut by reality, that promise seems empty. No legislation to repeal the sales tax is still alive in the legislative session.
When it comes time to vote, MainStream will hold these legislators accountable. You should, too.
