Kansas Gov. Sam Brownback is expected to shed some light in his State of the State address Thursday night on how he proposes to climb out of the budget abyss that he and the Legislature created.
The wisest remedies involve rolling back the income tax cuts passed in the last year few years, and mustering the courage to revoke some of the many sales and income tax exemptions and deductions that drain the state’s treasury.
But while waiting for Brownback to disclose his plans, it is instructive to review how Kansas got into this colossal mess.
May 11, 2010: Weary of recession-induced cuts, the Legislature narrowly approved increasing the state sales tax from 5.3 percent to 6.3 percent for three years. It was then supposed to drop to 5.7 percent, with the remaining increase designated for highway projects. Mark Parkinson, a Democratic governor who had stepped in to fill a vacancy and had no plans to campaign for a full term, signed the tax increase into law. It took effect July 1, 2010.
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January 12, 2011: Brownback, in his first State of the State address, said he wanted to “reset our tax code, particularly with an eye toward lowering income tax rates.” The newly elected Republican governor didn’t elaborate, and the Legislature didn’t pass tax cuts that first year.
By November, analysts gave the budget a healthy prognosis, predicting the state would finish the year with a comfortable ending balance. A group called Kansans for No Income Tax barnstormed the state on a bus tour.
January 11, 2012: Another State of the State speech, and this time Brownback came armed with details. He proposed cuts in the individual income tax, especially for the top bracket. And he broached the idea of ending the state income tax altogether for businesses set up to allow owners to declare profits as their personal income.
Moderate Republicans and Democrats immediately raised concerns about damaging schools and services by cutting taxes too deeply. Brownback said some of the money would be recouped by eliminating income tax credits, deductions and exemptions. He also said he would make the sales tax increase permanent.
A few weeks later, Brownback brought celebrity supply-side pitchman Arthur Laffer to Topeka to sell his program to legislative tax committees.
March 21, 2012: This was the day the Brownback tax cuts died and were resurrected.
The House had already passed a tax cut bill that drained state revenue far more than the governor had proposed. It kept all of the deductions and exemptions intact, and phased out the sales tax increase as scheduled. Analysts predicted it would create a budget shortfall by July 2014.
The Senate first rejected that bill on a 20-20 vote. Brownback and his staffers twisted arms. Two hours later, the bill was brought back and passed on a 29-11 vote. Steve Morris, the GOP moderate who at the time was Senate president, said he expected that both the House and Senate would pass a different bill that called for a longer phase-in of the cuts and more offsets.
May 22, 2012: Two days after the legislative session ended without an agreement on a softer plan, Brownback signed the massive tax cuts into law. Newspaper editorials, social welfare groups and even a coalition of moderate Republicans begged him not to do it, but the governor was unmoved. “Today’s legislation will create tens of thousands of new jobs and help make Kansas the best place in America to start and grow a small business,” he said.
January 15, 2013: In his third State of the State address, Brownback announced his end game. “Tonight we are here to take another step on our path to no state income tax,” he said. “Look out Texas, here comes Kansas!”
June 14, 2013: With another legislative session ended, Brownback signed a bill that cut individual income tax rates ever further. This plan scaled back most itemized deductions as well as the standard deductions for married couples and heads of households.
And it did something else: It made most of the 2010 sales tax increase permanent. Instead of rolling back to 5.7 percent at the end of the month, as specified in the law Parkinson signed, the Kansas sales tax was fixed at 6.15 percent. In effect, Brownback signed off on a tax increase — one that would be felt most keenly by poorer Kansans.
Budget forecasters said the new plan would keep the Kansas budget out of the red until at least 2018, an estimate that has proven to be wildly optimistic.
May 1, 2014: Moody’s Investors Service downgraded Kansas’ bond rating by a notch, citing worries over the state’s “relatively sluggish recovery compared its peers and “revenue reductions (resulting from tax cuts) which have not been fully offset by recurring spending cuts,” among other things. Standard & Poor’s also lowered the state’s bond rating three months later.
July 2, 2014: Nick Jordan, the Kansas revenue secretary, announced that revenues had fallen short of projections for three straight months, causing the state to finish the 2014 fiscal year with almost $338 million less in revenues than anticipated. “We’re not happy with this at all,” Jordan said.
Nov. 4, 2014: After a bitter campaign that saw dozens of high-profile Republicans defect to support Democratic candidate Paul Davis, Brownback won re-election by about 30,000 votes. On the campaign trail, he dismissed predictions that the tax cuts would crash the budget as “a bunch of lies.”
“The sun is shining in Kansas and don’t let anybody tell you any different,” Brownback said.
Nov. 10, 2014: A new revenue estimate revealed the dire reality. Kansas is on pace to collect $1 billion less in revenue through 2016 than its projected expenses. After exhausting the reserve fund, officials would still need to find $280 million to balance the budget this fiscal year, and an additional $436 million next year. Since then, those numbers have grown.
Confronted by reporters about the shortfall, Brownback said he was unaware of the huge budget gap before his election. “I knew what the public knew,” he said.
Like so much of the Kansas tax cut saga, that claim simply doesn’t add up.