There is a slow moving battle taking place in Kansas, and it’s one which will prove both important and instructive for fiscal conservatives around the nation. When Governor Sam Brownback took office a couple of years ago he was elected on a promise to reign in the government, cut taxes and put control of the people’s money back in their own hands. In short order he made good on those promises, but the short term effects washed out as a net negative for the state budget. Facing increasing shortfalls as revenues failed to meet expenses, Brownback has been on the ropes. His response earlier this year was to propose a hike in sin taxes on tobacco and alcohol (which never works) but conservatives have pretty well squashed that plan and have the governor now looking at politically risky spending cuts.
After facing stiff resistance to a proposed hike on alcohol and cigarette taxes, Kansas Gov. Sam Brownback (R) is now exploring cutting government spending and implementing other reforms to close a $600 million projected deficit for fiscal year 2015.
In January, Brownback proposed raising the cigarette tax by nearly 189 percent, from 79 cents per pack to $2.29 per pack, and raising the tax on beer, wine, and liquor by 4 percentage points, from 8 percent to 12 percent.
Observers inside the state have already been advising Brownback, trying to convince him that the problem isn’t the taxes, it’s the spending.
Dave Trabert, president of the Kansas Public Policy Institute, says Brownback’s sin-tax proposal addresses revenue when it should deal with excessive spending.
“There is no need to raise any taxes,” Trabert said. “Kansas does not have a revenue problem; it has a very large spending problem. Tax revenue for fiscal year 2014 was 28 percent higher than in 2004, though inflation was only 24 percent higher.”
The usual tax and spend forces have been on the march, trying to take advantage of this situation. In fact, the media has launched a barrage of attacks on the governor, publishing one screed after another after another trumpeting the “failure of tax cuts” to solve problems and insisting that he bend a knee to big government.
Ed and I have had periodic debates on these pages about the difference between a revenue problem and a spending problem. As I have always maintained, the two are not mutually exclusive and the current situation in Kansas seems to bear that out. The ideal situation is obviously one where you can spend the bare minimum while still meeting the basic functions of government and collecting only enough in taxes to meet that budget target. But when you are starting from a place where the voters are used to a certain level of services and perks, a massive sudden cut is essentially political suicide. You need to ease people into a new reality and give them time to see the fruits of those choices rather than suddenly shoving them over a cliff.
But in the case of Kansas, the die has already been cast. The legislators have, in large part, already signed pledges not to increase taxes and they will be held accountable for that. That means spending cuts, and Kansas clearly has room for some trimming in the budget. That doesn’t make it an easy job, though, so the governor has a very heavy lift in front of him. How he handles this will speak volumes about conservative doctrine and, assuming he succeeds, potentially provide a road map for other states to follow.