Something stunning happened on Tuesday night in Topeka. John Hanna of the Associated Press reports: “Kansas legislators Tuesday night repudiated the tax-cutting experiment that brought Gov. Sam Brownback national attention, with even fellow Republicans voting to override his veto of a plan reversing many of the income tax reductions he’s championed…. The state will increase its personal income tax rates and end an exemption for more than 330,000 farmers and business owners. Legislators expect the changes to raise $1.2 billion in new revenue over two years to close projected budget shortfalls totaling $889 million through June 2019…. Under the new tax laws, Kansas will return to having a third income tax rate for its wealthiest filers, something cuts in 2012 eliminated. The top rate will be 5.7 percent, as opposed to 4.6 percent now.”
Even before passing the tax hikes—in the wee hours of Tuesday morning—the Kansas legislature also addressed the school funding crisis, passing a new and more equitable funding distribution formula, and increasing revenue dedicated for all-day Kindergarten. Legislators hope that the new plan, which will increase public school spending by $293 million over two years will be acceptable to the state’s supreme court that, in March, again found the system unconstitutional and demanded that the legislature correct school funding by June 30 or shut down the public schools. There is some worry that even the new plan won’t be enough: “The justices did not say exactly how much funding must increase when they set a June 30 deadline for lawmakers to pass a new school finance law. But attorneys for four school districts that sued the state in 2010 have said the increase needs to be much larger, and Democrats have argued that the minimum is phasing in a $400 million increase over two years.” We’ll have to watch for the Supreme Court’s response.
There is also something else in the school funding plan that is objectionable to a number of legislators—an expansion of the state’s tuition tax credit voucher program. John Hanna explains: “Democrats and many GOP moderates also object to a proposal in the school funding plan that would expand a program giving income tax credits to corporations that donate money to private-school scholarships for students in poorly performing public schools. GOP conservatives created the program in 2014, and this year’s proposal would allow individuals and partnerships to claim the tax credit as well.”
The Washington Post‘s Max Ehrenfreund, analyzing the Kansas legislature’s repudiation of Brownback’s stubborn dedication to tax-slashing, reminds readers that voters in last November’s election—people who had been living through the economic collapse that has ensued since Brownback cut taxes in 2012 and 2013—defeated several ultra-conservative Republicans and replaced them with moderates.
Ehrenfreund also explores the broader, national implications of this week’s political shift on taxes in Kansas: “Tuesday’s vote was a rebuke not only for Brownback, but also for Republicans in Washington who have advocated similar cuts in taxes at the national level—including President Trump. Although Republicans in Kansas are giving up on the experiment, Trump and his allies are hoping to try again. The principles Trump endorsed during the campaign and in the early stages of his presidency are broadly similar to those enacted in Kansas. As Brownback did, Trump has proposed bringing down marginal rates, getting rid of brackets and giving a new break to small businesses.” Ehrenfreund reminds us that Brownback called his tax reform, “a ‘real-live experiment’ in conservative governance. Yet the economic boom Brownback promised has not materialized, leaving the state government perennially short on money and forced to reduce basic services.” “Last year, Kansas’s gross domestic product increased just 0.2 percent, federal data show, compared to 1.6 percent nationally. That was an improvement for Kansas, though: At the end of 2015, the state was in what many economists would describe as a recession, with the economy contracting two quarters in a row.”
Brownback, however, remains unrepentant. In a late report John Hanna, covered Brownback’s news conference following the legislature’s override of his veto: “Republican Gov. Sam Brownback says the income tax increases legislators enacted over his veto will be bad for the long term health of the state’s economy. The governor said during a news conference Wednesday that he believes the increases will slow job growth and discourage companies from moving to Kansas.”
Nick Johnson, the senior vice president for state fiscal policy at the Center on Budget and Policy Priorities, disagrees with Brownback: “Governor Brownback promised the tax cuts would be a ‘shot of adrenaline into the heart of the Kansas economy,’ but reality has been far different. Rather than spur a boom, the Brownback plan merely gave a tax-cut windfall to the rich and raised taxes on many lower income people while sending the state’s finances into a tailspin. Kansas’ finances are now in crisis. State reserves are drained, and Kansas faces a $900 million budget shortfall. Two bond rating agencies have downgraded Kansas due to its fiscal problems, and the state’s education system and other crucial services have suffered as the state struggled to afford to invest in people and communities. Kansas’ five year experiment shows us what happens when we try to tax-cut our way to prosperity.”
I guess the members of the Kansas legislature noticed, and finally did something to begin correcting the problem.