Editorials

‘The bridge to Kansas’: Why hasn’t Missouri learned from Brownback’s tax cut mistakes?

Missouri Auditor Nicole Galloway is sounding warning bells about the state’s reliance on individual income taxes.
Missouri Auditor Nicole Galloway is sounding warning bells about the state’s reliance on individual income taxes. File photo

Missouri Auditor Nicole Galloway recently said that her state is “starting to walk toward the bridge to Kansas.”

She didn’t mean that literally. At least one bridge from Missouri to Kansas is now closed for two years. No walking across that.

But with this metaphor, Galloway, a Democrat, is right on the mark.

She’s referring, of course, to the Kansas five-year budget debacle. In 2013, Kansas began a “real live experiment” in cutting income and corporate taxes in order to boost the state’s economy.

The shot of adrenaline never came. Instead, the Kansas budget cratered, causing credit rating downgrades and budget cuts to state programs.

Missouri, Galloway said, may soon face a similar challenge. Her office ran a “stress test” to determine the impact of a financial slump on the state’s budget.

The news wasn’t good. “Missouri’s budget is not adequately prepared for an economic downturn,” she said. “Inadequate contingency funds will not allow for a sufficient cushion to prevent drastic budget cuts that will impact Missouri families.”

Against this backdrop, Missouri lawmakers are considering several tax cuts this session.

Gov. Eric Greitens has proposed cutting personal income tax rates, as well as corporate taxes. Other measures take similar approaches.

Greitens insists his tax cut would be balanced by rescinding other tax breaks, making his proposal revenue neutral. “Missouri is not gonna be Kansas,” the governor said.

While that sounds good, keeping that promise is harder than it looks.

In 2012, Kansas Gov. Sam Brownback also offered so-called “pay-fors.” But they were dropped in the rush to pass tax cuts, resulting in the nationally-known Kansas tax and spending calamity.

Galloway’s report points out another major concern: Missouri has increasingly come to rely on individual income taxes for its revenue. That’s a problem if the economy goes sour.

“In terms of combined fiscal shock, (Moody’s) ranks Missouri as the 6th most sensitive state to a moderate recession,” the audit said.

Any economic setback would mean less money for Missouri, while spending for Medicaid and other services would rise. And because Missouri must hold an election to raise taxes above a certain amount, it would be harder to stop the flow of red ink if things went bad.

By the way, raising taxes in a recession is the wrong thing to do anyway.

Cutting taxes is popular, but it’s a risky way to run a state government. Kansans can tell you that story, and Missourians need to hear their message.

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