As state lawmakers scramble to close an estimated $320 million budget deficit for the current fiscal year, it’s worth asking how they got into this mess.
Politicians and pundits nationwide have placed the blame on the income tax cuts that Gov. Sam Brownback signed into law during the first two years of his administration. These cuts, they say, starved the state of revenue and blew up the budget. Kansas is now being held up as a warning for states like Arizona and Oklahoma that are considering lower tax rates.
Kansas does offer a warning, but it’s not about the danger of cutting taxes. It’s about the danger of allowing spending to spiral out of control.
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.
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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.
In that sense, the tax cuts did work. They worked for families saving money to put their kids through college. They also worked for businesses expanding their workforce. A study by the Kansas Policy Institute published last month compared job growth in Kansas to that in comparable states and found that our low taxes likely helped fuel job creation in the private sector.
Kansas’ problem is not low taxes but high spending. Unfortunately, there is little sign that lawmakers have learned this lesson. A new bill in the Kansas House would expand the state’s Medicaid program — one of the priciest items on the budget — to cover an additional 100,000 adults.
If passed, this legislation would blow new holes in the budget. Under Obamacare, federal funds would offset about 90 percent of the cost of Medicaid expansion by 2020, but that would still leave Kansas on the hook for an estimated $1.1 billion over 10 years. And with an Obamacare repeal in the works, it is very possible that Kansas could be left covering the entire cost of expanding Medicaid.
The only way to dig ourselves out of years of overspending is by cutting spending. Unfortunately, some lawmakers would prefer to raise taxes on Kansans. They are considering taxes on alcohol and cigarettes as well as increases to the individual income tax.
Taxpayers should not be penalized for the reckless spending of politicians. New taxes would only serve to strain family budgets and hurt job creation. They might raise revenue in the short run, but they would do lasting harm to economic growth and business development in Kansas.
Lawmakers now have the opportunity to make meaningful spending reforms that would ensure balanced budgets for years to come. If they are successful, Kansas could become a national model for how a limited government can expand economic opportunity for everyone. That’s a goal we should all support.
Jeff Glendening is the Kansas state director of Americans for Prosperity.