Kansans perform postmortem on Brownback tax ‘experiment’
The five men, most retirees, had been friends far too long to hold back.
“Brownback? That dumb…,” Larry Craig, 68, exclaimed, laying into Kansas’ Republican governor, Sam Brownback, now in the third year of his second and final term. “He screwed up everything since he became governor.”
Craig, a Republican, was sipping coffee at 7 a.m. Thursday at Mom’s Kitchen in Olathe with his buddies — another Republican, two independents, one Democrat. A lawyer, a business owner, a retired truck driver among them. They’ve been meeting up for 20 years.
“No Brownback fans in here,” declared Larry Hurt, 68, the lone Democrat and a retired Teamster.
The topic on the table: the governor’s 2012 tax plan, the most sweeping tax cut in state history. The governor called the cuts a “real live experiment” of the principle that slashing taxes and cutting government spending would spur economic growth that would power the state.
But over the last five fiscal years, that plan has failed to create enough jobs and businesses, leaving Kansas’ overall revenue — the money it spends on the mass of state services from fixing roads to schools to social services — down by some $3.6 billion.
The Republican-led Legislature, weary of severe budget shortfalls, handed Brownback a new tax plan aimed at reversing the state’s sinking fortunes by raising $1.2 billion more over two years. Income tax rates would go up, and 330,000 owners of “pass-through” businesses such as law firms and family farms would start paying taxes again.
The governor vetoed the plan. But on Tuesday, in a stunning rebuke, the Legislature overrode the veto, wiping away the centerpiece of Brownback’s conservative agenda.
If the voices of these Kansans are any indication, the mood of many people seems to be one of relief. The overall sentiment: “What took so long?”
That’s what a Kansas City Star reporter and photographer heard Thursday as they drove into the heart of Republican Kansas, where Brownback won 98 of 105 counties in 2014, two years after his tax plan was set into motion.
Few expressed concerns about tax breaks disappearing or of their own personal income taxes going back up, as long as the state gets back to sound financial footing.
But such feelings were hardly universal and often more complex.
In Baldwin City, one business co-owner, Diane Wagner, 58, fretted that with Brownback’s plan dead, businesses like hers will suffer.
“I think we’ll get taxed to death again,” Wagner said. But she also said she’s fed up with seeing state services decline and hearing from critical friends, former Kansans now living elsewhere, who speak of the state as a punchline.
In tiny Hillsboro, in Marion County, Marie Kessler, 52, who is the wife of a farmer and who owns her own quilting business, is sure that raising taxes will help the state, but also that getting rid of tax breaks for businesses will hurt her business and others and damage the state’s economic development.
“Tax incentives: Every business needs every bit of them,” she said flatly. “You take those away from businesses and businesses will close.”
No disagreement here among Larry Craig and his pals.
Hurt, the retired Teamster and lone Democrat, sat at the table along with Dennis Allison, 68, a retired truck driver; Bob Manske, 73, a private attorney; and Charlie Pulliam, 74, who works in the fiber cable business.
Not that Hurt is fond of taxes. “I’m actually thinking of moving out of the state of Kansas,” he said, although his pals don’t seem to take him seriously. He grew up in Wyandotte County and moved to Olathe in the 1990s.
“I can go to three different states right now that I don’t have to pay state income tax on my retirement. And that’s a lot of money,” Hurt said.
Although Brownback’s tax breaks didn’t help Hurt, they certainly did Manske. As an attorney and sole proprietor of his business, he got a tax exemption.
“Saved me about $4,000, $5,000 a year,” Manske said, and then laughed. “The way I spend money, didn’t even notice.”
But, tight with courthouse workers, he could see the effect of dwindling revenue on state employees, many of whom haven’t had a raise in years.
Everyone, Craig said, knew Brownback “screwed up when he did this deal … because where were they going to get the tax dollars?”
“He took it from transportation. He took it from education. He took it from Medicaid. He took it from KPRS (the Kansas Public Employees Retirement System), robbing Peter to pay Paul.”
Ken and Diane Wagner, owners of five John Deere dealerships in Kansas and four in Missouri, absolutely benefited from Brownback’s tax cuts. Diane will tell you she was grateful.
Both voted for Brownback in 2014, although they said they’re not straight-party voters.
“It’s kind of nice to hear from your accountant, ‘Oh, by the way, you’re getting a refund’ and ‘Oh, by the way, you don’t owe the state of Kansas anything except through your wages,’ ” she said.
She and her husband used the money just as Brownback anticipated businesses might. They hired employees, making additions that brought jobs and salaries to others.
But looking at the bigger picture, the state of the state, Ken Wagner grew ever more uncomfortable. Diane Wagner could see it, too, in the way education spending flattened out. She didn’t see how, if schools were suffering, any out-of-state businesses would move to Kansas.
“How are you going to attract a company to bring 1,000 employees to the state of Kansas when our schools don’t have the reputation they used to have?” she said.
In hindsight, the Wagners said, they wished Brownback had gradually reduced taxes to see if his plan worked, to see if it attracted businesses, before cutting so deeply. But it has been five years, they said, and the move to end the experiment is overdue.
“It was time,” Ken Wagner said. “We were supportive of his tax plan initially, but then the growth didn’t happen, and it didn’t happen, and it didn’t happen. You kept reading about all the deficits rising.
“… In the end you have a responsibility to support our school system. You’ve got a responsibility to support all the funding on roads and infrastructure. … It was well past time that taxes needed to be reinstated.”
Mike Fawl, 62, put his forklift in reverse, having just stacked another soybean container high in his barn. His family has owned this farm, now some 2,800 acres, since the 1850s, before Kansas was a state.
He shut off the forklift. It rumbled and then fell silent.
Killing Brownback’s tax plan and raising taxes “needed to happen,” he said. “It needed to happen. Everyone needs to pay their fair share of taxes, and it’s been inequitable for a while.”
He conceded, “That sounds kind of odd coming from a farmer” who benefited from the tax cuts.
“As a small-business person, you got a tax break, and it was meant to go out and hire people to work for you,” he said. But it only ever amounted to about $4,000 or $5,000 for him, he said.
“You can’t hire anybody for that. So what you do, you put it in your pocket. … If you live in a community, you have to look out for the people in the community, not just your personal benefit.”
Over the years, he said, he has seen schools suffer. He has a son, 36, who is a special education teacher in the Topeka area.
Roads, he said, have deteriorated.
“You drive any road around here, they screw up your tires. So I’m now paying for not doing things correctly. The tires don’t last as long.”
Fawl voted for Brownback in 2010, when statewide he received 63 percent of the vote, but not the second time, when Brownback edged Democrat Paul Davis by just four points.
“The budget never balancing, we were always at a crisis,” Fawl said. “There’s not enough money for schools. We don’t give raises to state employees. We take money from KPRS. We take money from the highway fund.
“… I was not happy with how he was treating the state at all. I was benefiting from it personally, but it wasn’t good for the whole state.”
Never quite sure whether his budget would be cut year to year, Doug Conwell, 60, had waited to see whether the Legislature would override Brownback’s veto.
When it happened, he was more than thankful. The 60-year-old interim superintendent for the Morris County school district “pulled the trigger,” hiring another school counselor.
“I was reluctant to do it any earlier than that,” Conwell said, “until I knew the state was committed to having the money to fund the (school) finance package.”
A new school finance plan is on the governor’s desk. It is expected to bring more money and stability to Kansas schools. Knowing that Kansas will be bringing in more revenue is a relief to educators like Conwell.
“For several years now, every year we’re wondering if we’re going to have enough money to actually finish out the year, or if we’re going to have cuts,” he said.
As hard as it might have been for Republican lawmakers to go against their Republican governor, Conwell said, he is grateful.
Jennifer Espinoza is all about her kids. Age 42, she has eight of them, ages 6 to 22, all girls except one 16-year-old boy. Her husband, Jose, is in the Army, stationed in Germany.
Right now she’s busy, in her black Nike gear, working with a medicine ball on her front lawn, building to a full sweat. It’s part of an intensive workout, including flipping truck tires and swinging a sledge hammer in her backyard.
She hasn’t put much thought into the effects of the governor’s tax cuts, but she knows this: She lives in a small town. If the plan was to bring more new businesses to the state, there is no evidence of it around where she lives, population 190.
Even if there were new businesses, would they last?
“As you can see, there’s not really anything here,” she said. “We’ve got the little Pit Stop over there on the corner. …You can’t really bring businesses into smaller towns because they’re not necessarily going to thrive. There’s not enough people.”
But Espinoza does care about her kids’ school. If a stronger budget helps teachers who regularly buy their own supplies to enrich their classes, she is fine with that.
Marie Kessler spoke with passion.
“People think if you’ve got a business, you’ve got money. No, you’ve got debt, plain and simple,” she said, standing in her shop, Kessler Kreations.
It’s a storefront, with walls covered in hand- and machine-stitched quilts, on the wide, sleepy main street in this town, population 2,900. It has been her business for 12 years.
“And you’ve got astronomical debt,” she continued. “There’s no way you’re getting out of that debt if you’re taxed to death.”
Kessler is sorry to see Brownback’s tax breaks for small businesses go away. She understands that the state has gotten billions of dollars less in revenue. “If they’re going to keep the state going, they have to generate it somewhere,” she said.
But those tax breaks have helped her as she has struggled to keep her shop going in a farm community where other shops have closed, cutting back on pedestrian traffic. Competing with the internet has been devilish. She used to sell retail fabrics out of her place, but after a while it just didn’t pay. She shut down that part of the business.
She said she pays a heavy property tax on the building.
“Employment taxes are huge,” she said. “You can’t afford to have employees; you can’t afford not to. So, by the time you lump all these taxes together — now you’re going to lump income taxes on all of that — I wasn’t making any income anyway. By the time you paid all of that, there wasn’t anything left for me.”
She and her husband also keep cows on about 200 acres. Brownback’s tax break, she said, brought them the first refund they’d had in years.
“It was a nice surprise,” she said.
What the governor offered helped to make their businesses that much more viable.
“I’m not asking to be tax-free by any means. I’m all for paying my fair share. But as a business owner, you tend to pay more than your fair share because you’re taxed on every little thing.”
Susan and Richard Mueller, residents for more than 40 years in nearby Mentor, had just taken a break from a painting a rental home, a three-bedroom ranch, they operate and hope to lease out in Salina.
“This is our retirement,” joked Susan, who, like her husband, is 67. Richard, a mechanic, retired from Phillips Lighting Co. after 46 years.
They are Republicans who twice voted for Brownback.
“I should have learned after the first time,” Richard Mueller said.
He conceded that he never really believed cutting taxes would be an economic engine for Kansas.
“I didn’t think they’d really work,” he said, “but I was willing to give it a try. I think they should have repealed it a couple of years ago before it got too bad.”
He continued: “I think he tried this deal and they should have saw that it wasn’t working sooner, instead of just going on and on, getting deeper and deeper.”
Susan Mueller thinks things have gotten very bad, indeed. “Look at the school system. It’s at its worst,” she said. “I just hope things get much better.”
To Marvel Meanweather, the very topic of Brownback’s experiment sparks anger.
“It did not help us. It did not help us,” said Meanweather, 45, who works for minimum wage as a home health care worker. By “us,” he said, he was referring to low-income black residents of Kansas.
“Because he cut us out of a whole lot of programs that were funded for our children, and not only for our children, but for us as lower income,” Meanweather said. “He knew that wasn’t right.”
He went on, gradually tying Brownback’s tax cuts into a larger complaint about what he sees as Brownback’s negligent treatment of poor people in Kansas and particularly of poor, black Kansans.
“His experiment for the tax cut, it did not work for the lower classes,” Meanweather said. “It only benefited the middle class. It messed up KanCare (the state’s version of Medicaid). It messed up all the programs that were funded for us, as lower income. He didn’t think about us when he did that.
“He was trying to do an experiment, and his experiment didn’t work …”
As critical as he was of Brownback’s tax plan, the idea of now raising taxes also rankles him. He thinks that even if state revenues increase, it won’t help needy Kansans.
“No,” he said. “Where’s that tax money going to? It’s not going to us. It’s not going to us to help with these programs for the lower income. Where’s the money going to? That’s what I want to know, Mr. Brownback. Where’s the money going to?”