Kansas’ experiment yields valuable lessons

At the same time as Michigan has started talking about tax cuts that would significantly impact our budget for years—even decades—to come, Kansas successfully reversed a number of deep tax cuts that had reduced revenues and caused budget deficits over the past five years. What happened in Kansas has taught us that tax cuts do not mean economic growth and that with less comes less. We at the League have regularly pointed to Kansas as an example of what not to do but that what we really need are investments in the things that Michigan businesses, residents and communities really rely on—good schools, drivable roads, safe communities and clean water and air. The following guest blog from Heidi Holliday, Executive Director of the Kansas Center for Economic Growth, talks about the hard lessons that Kansas had to learn, but we are grateful to Kansas for learning those lessons so that we do not have to. Congratulations Kansans, you are now on the path to prosperity!
By Heidi Holliday, Executive Director, Kansas Center for Economic Growth
With the state facing yet another budget shortfall of $900 million, government leaders decided that enough was enough. Governor Sam Brownback, who heralded the 2012 experiment, was proposing yet more temporary band-aid approaches and more cuts to deal with the shortfalls. The Legislature chose a different path and instead sent the governor a bill that would raise more than $1.2 billion in new revenue over two years by, among other things, repealing a costly tax break for pass-through income, rebalancing individual income tax rates by reinstating a third tax bracket, and reversing course on the governor’s plan to eliminate our state income tax. Brownback vetoed the legislation but, with bipartisan support, the House and Senate quickly overrode the veto.

Put simply, revenue matters. You can’t get something for nothing. We all want and deserve thriving communities with great schools, parks, and modern roads and bridges; and we chip in to pay for that. That’s what taxes are for.
Because of the scope of the 2012 changes, it didn’t take long before Kansans in every corner of the state began connecting the dots between the actions of state lawmakers and the quickly eroding quality of the things that make for a good economic foundation in every community. With every subsequent shortfall, the picture became more clear. Meanwhile, the promised economic boom—and the revenue rebound that would supposedly follow—never happened (as economists predicted). In the last few election cycles, voters have viewed candidates and their promises through a different lens, and the 2017 Legislature had the experience and public backing to chart a new course.
Most state tax codes, including ours, need further reform, but it’s high time that state tax policy adhere to one basic, proven (and now proven once again) principle—states need revenue to invest in the things that create thriving communities and a prosperous economy. Kansas just learned this lesson again, the hard way, so that your state doesn’t have to. You’re welcome.

— Heidi Holliday