Missouri muscles up, Kansas goes weak on crucial financial issues

Missouri Gov. Jay Nixon gets low marks for some of his actions, but deserves credit for his fiscal stewardship of the state.
Missouri Gov. Jay Nixon gets low marks for some of his actions, but deserves credit for his fiscal stewardship of the state. kmyers@kcstar.com

Missouri is a far from a perfect state.

The General Assembly is debating an irresponsible bill to let residents carry concealed guns without a permit. Lawmakers want to make it more difficult to vote for no good reason. Legislators on Tuesday blocked a needed wage increase for home health-care workers.

And Missouri Gov. Jay Nixon has been beaten up for legitimate reasons.

In a more positive light, the legislature recently set aside a bogus “religious freedom” bill that could have led to discrimination against gay people.

But here’s an important point where Missouri continues to shine: It is on firmer fiscal footing than many other U.S. states. That’s good news for taxpayers who want reasonable public services and lower borrowing costs.

As the deep financial problems of Kansas get plenty of deserved attention, it’s instructive to more closely examine how the Show-Me State is doing.

Most notably, Missouri has not passed the same kinds of destructive income tax cuts that Gov. Sam Brownback pushed through in 2012 in Kansas.

That’s why the General Assembly should not approve anything that approaches the $1 billion tax breaks pushed by Sen. Eric Schmitt. It should continue to ignore delusional tax-cut zealot Rex Sinquefield, a St. Louis area multimillionaire who says the tax cuts in Kansas should set an example for Missouri.

Here are a few key comparison points:

▪ On Tuesday, Missouri officials released revenue figures for the first 10 months of the 2015-16 fiscal year. It included some sobering news; April revenues were 5 percent lower than last year. However, revenues overall are still up 2.65 percent for the fiscal year.

Now check out Kansas, where legislators and Brownback administration officials were crowing about their April revenues being a few million dollars higher than expected. The bottom line is that Kansas tax receipts are up 2.69 percent over the prior fiscal year.

That’s right: The rate of budget increase is almost exactly the same, even after the Kansas Legislature passed the largest tax increase in state history in 2015 — mostly hiking sales and cigarette taxes. Why? Because the continued weakness in income tax receipts is dragging down the entire Kansas budget, forcing cuts in funding for roads, social services and universities.

▪ As reaffirmed last week, Missouri is one of the few states with what Nixon calls a “perfect AAA credit rating from all three independent rating agencies.” The solid rating helps the state borrow money at a lower expense to taxpayers. Nixon deserves much credit for this achievement during his nearly eight years in office.

In contrast, Moody’s Investors Service on Tuesday lowered Kansas’ credit outlook from “stable” to “negative.” Why? Because Brownback and the Legislature can’t balance the budget. They keep diverting funds from other services such as road upgrades and underfunding public pensions. Just Monday, the Legislature passed a new budget based on withholding a nearly $100 million payment into the state pension system.

▪ Finally, a pair of reports released in late April point to other fiscal differences in the two states.

Moody’s Investors Service said Missouri was in a “better position to handle a recession scenario,” partly because of strong cash reserves.

But Standard & Poor’s Ratings Services listed Kansas among eight states where “the risk that their credit quality could weaken is more imminent....” The agency said Kansas’ woes were caused by a “sweeping tax reduction.”

Kansas won’t get its fiscal act together until it repeals parts or all of the tax cuts.

Missouri will be in better financial condition as long as it does not go further down that road of ruin.