Guest Commentary

There’s no such thing as a free lunch … or ‘extra’ Kansas revenue

The Kansas State Capitol building in Topeka
The Kansas State Capitol building in Topeka Big Stock Photo

Kansas is facing a $1.1 billion budget shortfall over the next four years according to Kansas Legislative Research Department data. That’s after one of the largest tax increases in state history passed in 2017, and another effective $600 million income tax hike approved in 2018 by the Kansas House by refusing to return the windfall to taxpayers. The Senate voted to prevent the latest increase resulting from changes in the federal tax code but the House wouldn’t agree, so the tax burden on Kansans is arguably worse now than it’s ever been.

How could this happen, you ask? Even though 2017 spending set a record, politicians boosted spending 14 percent over the next two years. They passed the 2017 tax increase knowing there would be budget challenges within two years, and they added over $500 million more for school funding in 2018.

The Kansas City Star editorial page regularly criticized former Gov. Sam Brownback and state legislators for using highway transfers and spending down cash reserves when tax revenue was below annual spending levels, and that was fair criticism. Spending should not exceed tax revenue and legislators should comply with state law requiring a 7.5 percent ending balance each year. However, now that The Star’s wish has been granted — an enormous tax increase — budget gimmicks and deficit spending are ignored. Even worse, readers are now told that state officials’ wrongheaded projections show Kansas will likely have $900 million in “extra” revenue to spend.

Government accounting works just like your checkbook. You start with a beginning balance, add deposits and deduct payments to arrive at your ending balance. If you spend more than you deposited, your ending balance is lower than your beginning balance. If you keep doing that, you eventually run out of money.

And that’s the real story behind the government projections referenced by The Star. That $900 million “extra revenue” is just the beginning balance in next year’s checkbook. It drops to about $700 million the next year because spending is expected to exceed revenue by $200 million — and it declines to $300 million the following year because spending exceeds revenue by about $400 million. Kansas would shortly run out of money with that pattern continuing.

This is all without another penny for state agencies and universities, let alone Medicaid expansion and other things incoming Gov. Laura Kelly’s administration wants.

Election promises to spend more money without explaining how to pay for it amounts to legal vote-buying. More spending means higher taxes unless politicians commit to reducing other costs. Kansas is in its fourth consecutive decade of economic stagnation, with job creation and economic growth falling further behind the national average and more people leaving the state than choosing to move here. It didn’t start with the Brownback tax plan, as some would have you believe.

No new “investment” — the politically-correct term for spending — or subsidy has changed or will change the state’s economic trajectory. To the extent more money is truly needed for some function, it must come from eliminating unnecessary spending elsewhere, and Kansas has lots of opportunities to cut costs.

Every state provides the same basic services, but some states do so at much lower costs. Kansas, for example, spent 36 percent more per resident than the states without an income tax back in 2016, and it’s undoubtedly worse now.

Making efficient, effective use of taxpayer money isn’t popular with those who profit from inefficient government, but it’s the only path to prosperity for citizens.

Dave Trabert is president of Kansas Policy Institute, a 501(c)(3) nonprofit focused on limited government.