Tax cuts aren't only reason why Kansas has budget issues

There’s been a lot of hay made over the fact Kansas Republicans rejected a plan by Governor Sam Brownback to keep taxes low because of a major budget deficit. The Legislature approved the budget over the weekend, basically undoing five years worth of tax cuts. Via KCUR:

A group of moderate Republicans and Democrats elected since the passage of the tax cuts in 2012 helped lead the charge, but even some lawmakers who initially supported the cuts joined the override effort.

Senate Majority Leader Jim Denning voted in 2012 for the cuts, hoping they would provide the Kansas economy with the shot of adrenaline that Brownback promised. But weary of perennial budget struggles, Denning said before the override vote that the time had come to admit the cuts hadn’t worked as advertised.

“I’ve always backed up and mopped up my mess. That’s what I’m doing now,” said Denning, an Overland Park Republican.

Moderate-leaning Republican Stephanie Clayton, also from Overland Park, said reversing the tax cuts was a “major step” toward fixing the state’s budget problems.

“We have turned things around and we are headed in the right direction,” Clayton said.

The $1.2 billion tax increase passed over Brownback’s objections raises individual income tax rates and restores a third tax bracket eliminated by the 2012 bill. It also repeals a controversial tax exemption given to more than 300,000 business owners and farmers.

The Kansas Legislature decided to override Brownback’s initial veto of the tax increase last week, prompting a friend of mine to proclaim on Facebook it was again proof “trickle down” economics doesn’t work. That appears to be the prevailing theory nationwide, as well, with CNN reporting it was the failure of a “grand conservative experiment.” Here’s what Kansas City Star’s Bryan Lowry told CNN after being asked what happened.

These tax cuts, which Brownback had promised would lead to astronomical job growth, had really become politically toxic over the last four years. The state was running into a budget crisis every six months pretty much from November 2014 onward. For the current year, Kansas faced a roughly $900 million budget shortfall (over the next two years) and an order from the Kansas Supreme Court to increase education funding, so raising taxes was pretty much unavoidable unless you really wanted to make deep cuts to everything but K-12 education. And after three sessions of looking for one-time fixes, I think a lot of members of the Legislature were just ready to end the perpetual budget crisis.

Lowry actually got to the truth of the matter in a later comment, by pointing out tax cut supporters were criticizing the fact Kansas refused to cut spending over the last five years. It’s something Americans for Prosperity Kansas director Jeff Glendening hammered home in February. Via KC Star:

Brownback’s tax cuts were supposed to be the start of a new, small-government approach to growing the economy. And yet lawmakers did little to slow the growth in state spending: The state’s all-funds budget has increased by well over $1 billion since 2013.

There was no shortage of reforms available to reduce spending. A 2016 efficiency report commissioned by the Legislature identified 105 opportunities to increase the efficiency of the state government, which would cumulatively provide over $2 billion in savings over a five-year period.

Ultimately, lawmakers failed to follow through on their promise of a smaller government by refusing to cut spending along with taxes. That is why critics of the income tax cuts are wrong to seize on our imbalanced budget as proof they didn’t work. The point of these tax cuts, which saved individuals and small businesses about $800 million per year, was not to fill the state’s coffers. The point was to put money back into people’s pockets.

The hard data proves it as well. Kansas has seen only one year where government spending dropped (FY 2014), while increasing spending every year since then. This is something Republicans and so-called small government conservatives fail to realize time and time again. It’s not just tax cuts which spur growth, but slashing expenses. Most people cut spending when their income drops below a certain level. Governments need to learn this as well, and it seems like the only U.S. president with a lick of sense was Calvin Coolidge, who met every day with his Treasury Secretary to cut the budget.

The GOP refuses to learn this lesson, despite swearing to be the party of low spending and small government. It’s not just a GOPe problem, but a problem for pretty much the entire party. Perhaps it’s the idea of “doing something,” to appeal to constituents or the ridiculous idea that only cutting taxes will spur growth. They’ll learn it at some point, right?