Topeka Gov. Sam Brownback’s plan to give tax and student loan breaks to lure people to rural Kansas was greeted warmly by legislators on Tuesday, but they said the proposal still needs work.
Kansas Revenue Secretary Nick Jordan said the Brownback administration was trying to reverse a centurylong migration from rural counties.
“This is a very innovative and new idea on how we might repopulate and bring people back to rural Kansas,” Jordan told the Senate Taxation Committee.
Senate Bill 198 would create “rural opportunity zones” that would grant state income tax exemptions for five years to people who move from outside Kansas to any of the 40 counties in Kansas where populations have declined more than 10 percent since the 2000 Census.
And the bill would allow those counties the option of establishing a student loan repayment program that could repay student loans up to $15,000. The participating county and state would share this expense.
Brownback’s policy director, Landon Fulmer, said if enacted the proposal would show the benefits of reducing state income taxes as a way to spur economic growth. He described it as a “test-tube” program that would help policymakers in an eventual overhaul of the tax system. The state faces an estimated $492 million budget shortfall, and Brownback has said he wants to change the tax system in a way to attract more businesses and increase revenue.
But members of the Taxation Committee voiced several concerns about the proposal.
Sen. Jeff King, R-Independence, noted that the tax breaks could hurt one of the counties he represents: Cherokee County, which is one of Kansas’ poorest. Yet because its population didn’t decline by more than 10 percent, it would be ineligible to become a rural opportunity zone, while every county surrounding it would be eligible.
The effect, King said, could be that Cherokee County would be at a disadvantage with its neighboring counties in luring people and businesses.
Other members of the committee questioned why the student loan payment plan was limited to Kansas residents who went to college outside Kansas, saying it should probably apply to Kansans who stayed in the state to go to school. And there were many questions about the cost of the program.
Under the proposal, the state would cap its student loan payback portion to $1.5 million per year. The income tax exemption was expected to reduce taxes to the state treasury by $1.1 million during the first year, but officials said an exact estimate was difficult to nail down because they didn’t know how many people would take advantage of the program.
The committee appointed a subcommittee to work with the Brownback administration on questions that had arisen.