Kansas budget disaster hitting schools hard

Governor’s economic experiment puts state in $345 million hole

COLUMBUS, Kan. — In February 2015, three years into the supply-side economics experiment that would upend a once steady Midwestern economy, a hole appeared in Kansas’ finances.

To fill it, Gov. Sam Brownback took $45 million in public education funding. By April of this year, with the hole at $290 million, Brownback took highway money to plug it. A month later, state money for Medicaid coverage went into the hole, but the gap continued to grow.

Today, the state’s budget hole is $345 million and threatens the foundation of the state, which was supposed to be the setting for a grand economic expansion but now more closely resembles a battleground, with accusations and lawsuits flying over how to get the state’s finances in order.

The deficits were caused by huge tax cuts, championed by Brownback and the Republican-dominated Legislature, that were supposed to set the economy roaring. They didn’t.

The budget shortfalls have been felt across the state, particularly by public schools, and have embroiled the Kansas Supreme Court along with state lawmakers and the governor.

Through it all, Brownback has repeatedly pledged his faith in the free market.

“We’re going to continue to grow the economy,” Brownback has said in response to questions about each new revenue shortfall.

His opponents in the Legislature say Brownback’s mantra has failed the state and carries a stern lesson in theory versus reality to other states contemplating the same free-market ideas.

“It’s estimate and pray on the income taxes,” said state Sen. Laura Kelly, ranking Democrat on the Ways and Means Committee. “Even with significant changes, we won’t see personal income receipts (increase) until 2019.”

An ideological war over the way Kansas collects and spends money has erupted in the capital of Topeka and spilled into every corner of the state. After five years of an economic crusade that has left its originator, Brownback, as the least popular governor in the nation, Kansas has been forced to use the settlement from a national tobacco lawsuit to cover the hole in its general fund budget — money that was supposed to go to an early childhood education endowment.

It was a risk Brownback ran when he overhauled the state budget based on an interpretation of fiscal conservatism that dramatically cut personal income taxes.

The state would thrive, he pledged, because the tax cuts would help keep businesses and smart, young Kansans in the state, not fleeing “to Houston, or Dallas, or Chicago or somewhere else.”

“It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments,” Brownback wrote it 2012.

It hasn’t worked out. Revenue from income tax collections plummeted 22 percent. A separate repeal of taxes on partnerships and limited liability companies meant the surrender of 30 percent of state revenue.

A projection issued Nov. 11 puts Kansas in a bind next fiscal year, when state revenue estimators project receipts to amount to $5.5 billion, down 7.4 percent from this year’s estimate.

Unwilling to scale back the income tax cuts, the state increased the sales tax. Now Kansas has the second-highest sales tax in the nation, and such reliance on sales taxes has saddled the state with additional problems: Deflation is dropping the prices of goods and the taxes the state collects on them.

Tired of the bleating horn of bad news, in September Brownback silenced a quarterly economic evaluation of the state that counted employment, unemployment, personal income and energy production, and consistently illustrated the state’s plunging revenues. He had done so before, in August 2015, when he ordered a halt to a semiannual economic report.

In the state’s southeast corner, the poorest area in Kansas, coal mines have died and given way to paper mills, which shuttered as American business went paperless. Today, nearly 30 percent of families with children in the region receive food stamps. In Pittsburg, the largest city in the area, with about 20,000 residents, the downtown is pocked by shuttered storefronts.

In Columbus, population 3,300, manicured lawns front one-story ranch houses built when the area was still prosperous, or at least on its feet

“We’re a little bit — what’s the word I want to use — I’m a little bit backwoods. We’re a little rough around the edges,” said Steve Jameson in his seat in the principal’s office at Columbus’ Park Elementary. “We’re hard workers, and it’s high poverty. Sometimes, in poverty, you have that sense of helplessness.”

Jameson believes in the importance of pre-K education. His pre-K funding is frozen at 2013 levels because of the cuts, meaning he can enroll 30 children in summer pre-K. He has a waiting list every year, and he has been told that next year summer’s pre-K program will be cut.

Even if the Legislature raises personal income taxes and repeals the exemption on business taxes, the state will not see its first receipts until 2018.

In the meantime, the budget hole grows and grows.

“It demonstrates the pickle that Brownback and the Legislature have gotten this state in,” Loomis said. “There’s no easy way out.”

NIGEL DUARA/LOS ANGELES TIMES/TNS Park Elementary School Principal Steve Jameson, seen in his office in Columbus, Kan., has been told his pre-kindergarten summer program will be cut because of a lack of funding due to state budget problems.