Kansas tax hike hailed as fix doesn’t quite balance budget
TOPEKA, Kan. — The big income tax increase Kansas legislators enacted over Gov. Sam Brownback’s veto won’t balance the budget by itself, despite immediately boosting the state’s credit outlook.
Even though the reversal of most of Brownback’s income tax cuts will inject $1.2 billion in new revenue through June 2019, lawmakers will have to continue relying on some of the same fiscal patches they’ve employed in recent years to keep the books balanced as state law requires.
“It’s going to take years to dig out of the hole,” said Sen. Laura Kelly, a Topeka Democrat who helped negotiate the final version of this year’s budget legislation.
Part of the reason for the ongoing shortage is the spending increase for public schools that legislators approved last month to meet a state Supreme Court mandate. However, the state’s budget problems were deep enough that the GOP-controlled Legislature couldn’t raise taxes — or cut spending — enough to fix all of them at once and still get the supermajorities needed to override Brownback’s veto.
“In essence, they’ve converted a super-large project into a medium-sized or small problem,” said John Hicks, executive director of the National Association of State Budget Officers. “Things are rarely done or completely resolved in one action.”
State lawmakers and commentators outside Kansas read the GOP-controlled Legislature’s action on taxes earlier this month as a repudiation of the tax-cutting experiment the conservative governor launched in 2012, which he touted as a national model. They also saw it as a timely rebuke of President Donald Trump’s plan to cut federal income taxes, which contained some similarities.
Kansas faced persistent budget problems following the Brownback-inspired tax cuts. The bill enacted this year over his veto largely rolls back those policies, raising rates and eliminating an exemption for more than 330,000 farmers and business owners.
After legislators overrode Brownback’s tax veto, Moody’s Investors Service changed its outlook for Kansas’ credit rating from negative to stable and described the event as “credit positive.” It said in a report that the tax increase will reduce the state’s budget problems to “more manageable dimensions.”
The governor has blamed the state’s budget woes on slumps in agriculture and energy production. Through last year, a more conservative Legislature appeared to agree with him.
Lawmakers tinkered with income tax deductions in 2013 and raised sales and cigarette taxes in 2015 to patch budget holes. They also siphoned money from highway projects and scaled back contributions to public pensions.
Voters turned Brownback’s legislative allies last year, electing more Democrats and moderate Republicans. New lawmakers said repeatedly that voters told them to find a permanent budget fix.
But the bipartisan group of legislators that repudiated Brownback’s policies still produced 2018 and 2019 budgets that wouldn’t balance without siphoning money from highway projects and shorting pension contributions — a total of about $830 million over two years.
Brownback’s fellow conservatives took note and a few quickly appropriated an anti-Trump hashtag on Twitter, #YouWereDuped.
“This is so we can pretend that we have a balanced budget, that there has been some sort of structural fix,” said Sen. Mary Pilcher-Cook, a conservative