Happy New Year, Kansans! A new legislative session begins soon, and troubled state finances once again top the agenda. Kansas staggers forward in a perpetual budget crisis that our lawmakers have been unable—or unwilling—to solve.
The basic problem is simple. Kansas does not have enough income to meet expenses.
The cause of the problem stems directly from the Brownback income tax cuts. Those tax policy changes indisputably led to a sharp decline in the state’s revenue stream. As a result, in the last three years, Kansas has consistently spent more than it takes in, a practice that makes the state poorer and poorer.
At first, lawmakers made up the difference between declining income and growing expenses by drawing down cash reserves. A $709 million bank balance went to zero in less than two years.
With the bank account empty, lawmakers began drawing hundreds of millions from other state government accounts. The highway fund has been the prime target, but many other funds, including those set aside for early childhood programs and economic development, were also sacrificed in the attempt to keep the general fund solvent.
Of course, lawmakers also tried hard to cut expenses. Funding for public schools, a prime responsibility of the state, has been pulled down far below where it should be. State hospitals and prisons remain understaffed. The current budget slashes planned maintenance on roads and bridges. Yet, even these efforts have not lowered expenses nearly enough to make them fit within the dramatically diminished revenue stream.
The budget imbalance became so acute last year that even conservative lawmakers voted to raise the sales tax rate, a move that further shifted the state’s tax burden to low- and middle-income Kansans. The sales tax increase improved the overall revenue stream, but it did not come close to solving the problem.
The Brownback tax cuts brought the revenue stream down so significantly that truly damaging expense cuts coupled with a sales tax increase have not repaired the budgetary mess.
The financial problem and its cause are easy to identify, and so is the solution. Revisit the income tax cuts, which were far too deep.
Don’t expect that, though.
Gov. Brownback has announced that he does not want to deal with any tax changes this session. Nor do the conservative legislators who voted to raise the sales tax. 2016 is an election year for all members of the Legislature, so many would prefer that Kansans forget what happened in the last legislative session. It’s also unlikely that expenses will go down. In their latest gambit to lower spending, lawmakers voted to pay a consulting firm $2.6 million to find “efficiencies” for them. The results are not all in, but the early recommendations from the contractor suggest selling KDOT woodchippers and paying bills late—a very inauspicious start.
When baseball great Yogi Berra died in September, the media replayed many of his famous witticisms. A favorite, “It’s like déjà vu all over again,” was reportedly first uttered by Yogi when Mickey Mantle and Roger Maris repeatedly hit back-to-back home runs in the 1961 season. Yogi didn’t know it then, but his phrase applies to the Kansas budget now.
Another year. Another budget crisis. Déjà vu. If our lawmakers again avoid the real solution by taking even more money from the highway fund, or by borrowing, or by exercising “creative accounting,” and if we buy the governor’s recent declaration that “we are going to be in good shape,” then Kansas will arrive at January 2017 with yet another budget crisis. But our state will be poorer and another year behind. It will be like déjà vu all over again.
Duane Goossen is a Senior Fellow at the Kansas Center for Economic Growth and formerly served 12 years as Kansas Budget Director.
