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INSIGHT KANSAS: Lurching from one financial crisis to the next

H. Edward Flentje is professor emeritus at Wichita State University.
H. Edward Flentje is professor emeritus at Wichita State University.

After smooth sailing financially for most of the 20th century, risky, ill-considered actions on state taxes now send Kansas’ ship of state lurching from one financial crisis to the next. And Kansans will bear the burden of these decisions for the foreseeable future.

This radical experiment has produced five years of deficit spending, budget cuts, and repeated threats of budgetary disaster, excessive and unnecessary borrowing and credit downgrades, two rounds of huge tax increases, and general incompetence in state finance.

In this new normal, Kansans can expect a continued deterioration of core state services—education, health care, highways, and aid to vulnerable citizens. For years into the future our children and grandchildren will be paying off debts incurred to protect their parents’ tax cuts, and borrowing costs will increase. Business owners and nonprofit organizations will continue to experience an uncertain and threatening tax environment.

Last week’s court order on school finance and this week’s news of sinking revenues foretells that state finance will again be on the rocks sooner than expected.

Republican state lawmakers who took charge in 2010 and solidified their majorities in 2012 and 2014 are responsible for this financial debacle. Well, let’s add that the voters who placed them in office bear responsibility too, but they have been misled along the way.

None of these lawmakers campaigned for the heresy of eliminating the state income tax in 2010, certainly not candidate Sam Brownback. He cloaked his “road map” around quickly forgotten themes of addressing childhood poverty, 4th grade reading levels, and education.

These Republicans drank the tax-cut Kool-Aid as an economic panacea offered by discredited, corporate guru Arthur Laffer. A tortuous legislative process in 2012 broke pledges of compromise and forced through an ill-conceived bill that cut and eliminated state income taxes to the tune of nearly $1 billion annually and would have imposed spending cuts of $7 billion, nearly 25 percent of the state budget over the next five years, based on the governor’s spending plans.

These same Republicans then did a complete about-face on taxes and began advocating increased sales taxes to clean up their self-inflicted financial mess. Remember that they had used their opposition to a “temporary” sales tax in the 2010 campaign to target and successfully defeat twelve house Democrats. They further joined with the Kansas State Chamber to blame moderate Republicans for the 2012 tax fiasco and target them in the 2012 primary, routing nine incumbent state senators.

The first round of tax increases came in 2013 after an extended legislative session. Republicans increased sales taxes and shrunk income tax cuts, totaling $420 million annually, to fill the budget hole.

However, economic reality again undermined the tax-cut dogma throughout election year 2014: state revenues plummeted; economic growth lagged; credit was downgraded; and another budget crisis loomed. Brownback buried his head in the sand with a clever campaign ditty: “The sun is shining in Kansas and don’t let anybody tell you any different.” The ruse worked, as he eked out a narrow victory, albeit with 100,000 fewer votes than in 2010.

The gap between revenues and expenditures, however, had ballooned to $800 million in 2015. During the longest legislative session in state history, state house members were locked in their chamber late into the night, threatened and browbeaten. Finally, at 4:00 a.m., sleep-deprived Republicans enacted a second round of higher taxes, primarily sales taxes and further shrinking of income tax cuts, totaling on average $450 million annually over the next three years. Brownback held no signing ceremony.

Unstable and unsustainable state finance has handed Kansans deteriorating state services, foisted debt onto future generations, and warned prospective businesses to be wary of the state’s volatile tax climate. Is this financial future what Kansans bargained for when they voted these Republicans lawmakers into office?After smooth sailing financially for most of the 20th century, risky, ill-considered actions on state taxes now send Kansas’ ship of state lurching from one financial crisis to the next. And Kansans will bear the burden of these decisions for the foreseeable future.

This radical experiment has produced five years of deficit spending, budget cuts, and repeated threats of budgetary disaster, excessive and unnecessary borrowing and credit downgrades, two rounds of huge tax increases, and general incompetence in state finance.

In this new normal, Kansans can expect a continued deterioration of core state services—education, health care, highways, and aid to vulnerable citizens. For years into the future our children and grandchildren will be paying off debts incurred to protect their parents’ tax cuts, and borrowing costs will increase. Business owners and nonprofit organizations will continue to experience an uncertain and threatening tax environment.

Last week’s court order on school finance and this week’s news of sinking revenues foretells that state finance will again be on the rocks sooner than expected.

Republican state lawmakers who took charge in 2010 and solidified their majorities in 2012 and 2014 are responsible for this financial debacle. Well, let’s add that the voters who placed them in office bear responsibility too, but they have been misled along the way.

None of these lawmakers campaigned for the heresy of eliminating the state income tax in 2010, certainly not candidate Sam Brownback. He cloaked his “road map” around quickly forgotten themes of addressing childhood poverty, 4th grade reading levels, and education.

These Republicans drank the tax-cut Kool-Aid as an economic panacea offered by discredited, corporate guru Arthur Laffer. A tortuous legislative process in 2012 broke pledges of compromise and forced through an ill-conceived bill that cut and eliminated state income taxes to the tune of nearly $1 billion annually and would have imposed spending cuts of $7 billion, nearly 25 percent of the state budget over the next five years, based on the governor’s spending plans.

These same Republicans then did a complete about-face on taxes and began advocating increased sales taxes to clean up their self-inflicted financial mess. Remember that they had used their opposition to a “temporary” sales tax in the 2010 campaign to target and successfully defeat twelve house Democrats. They further joined with the Kansas State Chamber to blame moderate Republicans for the 2012 tax fiasco and target them in the 2012 primary, routing nine incumbent state senators.

The first round of tax increases came in 2013 after an extended legislative session. Republicans increased sales taxes and shrunk income tax cuts, totaling $420 million annually, to fill the budget hole.

However, economic reality again undermined the tax-cut dogma throughout election year 2014: state revenues plummeted; economic growth lagged; credit was downgraded; and another budget crisis loomed. Brownback buried his head in the sand with a clever campaign ditty: “The sun is shining in Kansas and don’t let anybody tell you any different.” The ruse worked, as he eked out a narrow victory, albeit with 100,000 fewer votes than in 2010.

The gap between revenues and expenditures, however, had ballooned to $800 million in 2015. During the longest legislative session in state history, state house members were locked in their chamber late into the night, threatened and browbeaten. Finally, at 4:00 a.m., sleep-deprived Republicans enacted a second round of higher taxes, primarily sales taxes and further shrinking of income tax cuts, totaling on average $450 million annually over the next three years. Brownback held no signing ceremony.

Unstable and unsustainable state finance has handed Kansans deteriorating state services, foisted debt onto future generations, and warned prospective businesses to be wary of the state’s volatile tax climate. Is this financial future what Kansans bargained for when they voted these Republicans lawmakers into office?

H. Edward Flentje is professor emeritus at Wichita State University and returns as a contributor to Insight Kansas after a leave of absence.

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