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Kansas state recovery is now beginning E-mail
Wednesday, 08 November 2017 10:01

A SECOND OPINION, The Topeka Capital-Journal

Kansas is slowly emerging from the perpetual fiscal slump that has beggared our state government for the past four years.

At this time last year, Kansas faced a $345 million budget shortfall, along with a projected $582 million shortfall in the following year. In 2016, every month brought alarming news of surging shortfalls and missed revenue estimates, and incoming lawmakers knew they would have to make drastic changes to move the state back toward something resembling a sustainable fiscal policy.

After the 2012 tax cuts were fully implemented, the state’s income tax receipts collapsed by more than $700 million. To appreciate just how much money the state lost in the subsequent years, take a look at the total individual income tax revenue in fiscal year 2013 ($2.9 billion) versus FY 2014 ($2.2 billion), FY 2015 ($2.3 billion), FY 2016 ($2.2 billion) and FY 2017 ($2.3 billion). If income tax receipts would have remained constant from 2013 to 2017, Kansas would have brought in another $2.68 billion in revenue.

Imagine what such a staggering amount of money could have done for the state. The Supreme Court recently ruled that the Legislature still isn’t making adequate investments in education, despite a $487 million funding increase (to be phased in over two years) passed in the 2017 session. Alan Rupe is an attorney who represents the school districts that sued for more funding, and he says the state needs to allocate $893 million to K-12 education next year. Many lawmakers argue that such a huge influx is unnecessary, but either way, the revenue Kansas has wasted on its pointless tax experiment could have covered that cost several times over.

On Thursday, the Consensus Revenue Estimating Group released the state’s most recent revenue projections. What a surprise - after the Legislature repealed Gov. Sam Brownback’s tax cuts last session, individual income tax receipts are expected to surge from $2.3 billion in FY 2017 to $2.9 billion in FY 2018 and more than $3 billion in FY 2019 (right back to where they were in 2013). While it may seem obvious that raising income tax rates and getting rid of unfair exemptions would bring in more revenue, you wouldn’t have known it by listening to defenders of the tax cuts over the past few years.

Remember when Brownback administration officials constantly told us that the massive budget shortfalls and missed revenue targets were due to the sluggish performance of the oil, gas and agriculture industries? Those industries are still in a slump (particularly agriculture), but the revenue situation is set to improve dramatically. This suggests that the tax cuts were largely responsible for the state’s budget problems.

However, as former state budget director Duane Goossen notes, “Big changes to tax law can be quite difficult to forecast with precision.” For example, we won’t know how much revenue will be generated by the re-imposition of taxes on LLCs and other forms of business income until next year because “individuals can choose to skip the quarterly payments without risking a penalty, and make one large payment by next April 15.”

Moreover, there’s still an imbalance between the state’s recurring revenue and expenditures, and we’ve assumed hefty obligations (such deferred payments to the Kansas Public Employees Retirement System) that will have to be paid off. But we should still recognize that Kansas is in its strongest fiscal position in years, no thanks to the people who would have preferred to keep us in an endless cycle of shortfalls and cuts.




About The High Plains Daily Leader

The High Plains Daily Leader and Southwest Daily Times are published Sunday through Friday and reaches homes throughout the Liberal, Kansas retail trade zone. The Leader & Times is the official newspaper of Seward County, USD No. 480, USD No. 483 and the cities of Liberal and Kismet.  The Leader & Times is a member of the Liberal Chamber of Commerce, the Kansas Press Association and the Associated Press.

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