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Archive for Monday, September 24, 2012

Brownback brushes up story supporting tax cuts

September 24, 2012

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— Gov. Sam Brownback’s administration already has developed talking points to deflect anticipated criticism of the newly enacted massive income tax cuts should Kansas face significant budget problems next year.

Critics said their fears about the aggressiveness of the cuts were confirmed by the conservative Republican governor’s budget director in July, when he told state agencies to draft proposals for slicing up to 10 percent of their spending.

Brownback and his allies argue that the tax cuts will stimulate economic activity, generating new tax revenues to more than offset what the state gives up. The governor concedes that economic growth may lag and the state may face some belt-tightening, but he says core services will be preserved.

The administration is fashioning a narrative that suggests budget cuts may be necessary because the nation’s economy may remain stagnant. Europe’s financial crisis also looms as a potential threat.

“There are forces beyond the state’s control,” Brownback spokeswoman Sherriene Jones-Sontag said last week. “There’s still a great deal of uncertainty with the economy.”

The state is decreasing its individual income tax rates for 2013, with the top rate dropping to 4.9 percent from 6.45 percent. Also, the state will exempt the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes.

The Legislature’s research staff projects that the tax cuts will be worth $231 million during the current fiscal year and increase to more than $800 million during the next fiscal year. The collective tax relief over the next six years is estimated at more than $4.5 billion.

The same legislative researchers project that the tax cuts will create collective budget shortfalls approaching $2.5 billion over the next six years.

Early fallout

Brownback’s aides described July’s budget instructions as a planning tool, but signs that significant cuts are a possibility keep popping up. The Department of Commerce announced last week it was ending its long-running Kansas Main Street program — which provided money and support for communities to help preserve small downtown businesses — trimming 18 jobs.

During a state Governmental Ethics Commission meeting, Executive Director Carol Williams warned that one of two staff auditors was at risk of being laid off, and said administrators in other agencies are certain that 10 percent cuts are imminent.

“The biggest force driving his budget problem is the tax cut,” said Kansas Democratic Party Chairwoman Joan Wagnon, a former state revenue secretary, said of Brownback.

Growth potential

Brownback and his allies have argued repeatedly that the projections are too pessimistic about future revenue growth that would come from a boost in economic activity, particularly small businesses.

“This plan simplifies their taxes and helps business owners retain more of their profits, which can then be reinvested in their livelihood or the community,” Revenue Secretary Nick Jordan said in a statement earlier this month.

The administration sees the potential growth to be too promising to reverse course, even when faced with the possibility of trimming the budget.

Still, raising questions about the national or global economy could help the administration as it defends the income tax cuts. The post-9/11 recession in 2002 largely shielded then-GOP Gov. Bill Graves and legislators from recriminations that they’d been too aggressive in cutting taxes during the 1990s.

Similarly, the suddenness and depth of the 2008 financial meltdown all but wiped away questions about whether Democratic Gov. Kathleen Sebelius and lawmakers had risked the state’s long-term financial health by committing to big increases in education spending without raising taxes in 2005 and 2006.

But if legislative researchers are on target in their hotly debated projections, Kansas is already headed toward a long-running budget crisis.

“They’re going to have to work hard to explain the actions they took deliberately,” Wagnon said. “Sherriene can spin it as forces beyond their control, but the truth is this is what they created.”

Comments

Mike1949 2 years, 2 months ago

Are the republicans going to reinstate the taxes when the state of Kansas is about ready to declare bankruptcy? Or are they going to let the state of Kansas declare bankruptcy and blame it on someone else?

chootspa 2 years, 2 months ago

They'll shift the burden to property and sales taxes, but they'll use the decreased revenues as an excuse to shove through a bunch of radical legislation.

billbodiggens 2 years, 2 months ago

They want the State to go banckrupt so they can reshape it to their liking. They simply do not care who or how many they hurt in the process as it will benefit them....!

optimist 2 years, 2 months ago

So it wasn't Obama that gave TARP funds to car companies and financial institutions and increased our debt from $9 trillion to nearly $16 trillion in less than a single term? It seems to me that it is these actions that have enslaved us and our posterity. I for one don't see how empowering our government to take a disproportionate amount of tax from those that have legitimately earned it is a solution to our economic woes. It seems to me that spending more than we have on redundant services and over employment at the federal level is what is driving the economy down. Not to mention the federalization of about 1/6th of the private sector by way of the Affordable Care Act. Pretty soon there won't be enough private sector left to support the public sector.

Jonathan Becker 2 years, 2 months ago

This is so reminiscent of the opening scene "The Chicken Game" in Rebel Without a Cause.

Alyosha 2 years, 2 months ago

SageonPage continues to see "journalism" as an "attack." Like other fundamentalists and authoritarians, any deviation from SageonPage's beliefs can't, of course, be tolerated, and must be demonized. Sad.

dabbindan 2 years, 2 months ago

hard working kansans like lawyers and doctors support staff who pay their state income tax while their bosses walk away paying none?

bad_dog 2 years, 2 months ago

Aircraft are but one means of transportation utilizing fossile fuels. A creative person might believe alternative energy sources (e.g. biodiesel, electrcity or CNG) could be utilized to power other modes of transportation, driving the overall demand for fossile fuels such as kerosene down and preserving them for more necessary uses such as the one you cite.

BTW, hybrid aircraft are being developed at this time. Battery size, weight and capacity are the primary obstacles, but there will come a day...

bad_dog 2 years, 2 months ago

With creative thinking such as yours, we'd all still be living in caves, rubbing a couple of sticks together while we shiver...

headdoctor 2 years, 2 months ago

For Starters Brownback could try a little truth and that truth is we do not have a surplus. That surplus is a fictitious figure from budgeting guess work. There is no surplus when Kansas has a $28.5 billion debt.

jafs 2 years, 2 months ago

Either the tax cuts will stimulate the economy, more than making up for the amounts cut, or they won't.

If growth will lag, and we'll have some "belt-tightening", then the cuts won't work as advertised, right?

headdoctor 2 years, 2 months ago

At the very best this plan will be a wash. Cutting taxes on businesses does not mean more growth and jobs. Businesses only put more people to work if they are expanding because of new ventures or major sales and or service increases. The economic downturn has only proven that businesses can get by with forcing a smaller workforce to handle the load. The business tax relief will be used for everything but jobs and expansion.

The sales tax relief does not mean consumers are going to start buying more especially if Brownback successfully transfers some of the State Budget to local property taxes increases. Brownback hasn't figured out that in order for an economy to be viable. Money has to be moving in the basic day to day economy. If the consumers can't afford to buy more products and services along with the more wealthy setting on their money in investments, the money movement stagnates.

verity 2 years, 2 months ago

Brownback knows exactly what he is doing. Slash and burn. Destroy the middle class, destroy moral, until we will all bow to him and the Kochs and give them what is their due---our complete obeisance.

Back to the dark/middle ages, folks. We will be ruled by our betters and depend on them for every crumb we get and we will be grateful for it.

Patricia Davis 2 years, 2 months ago

Which is why sane Kansans every where must vote Democrat for state senators in November. Gridlock is the best we can hope for until we can kick Brownback and his stooges to the curb.

chootspa 2 years, 2 months ago

When exactly did being a worker become a bad thing?

Alyosha 2 years, 2 months ago

Your attempt to impose your fantasy view upon liberals - bringing up the phrase "worker's paradise" that no one of any seriousness considers a propos of anything - is laughably juvenile and does nothing but show you have no factual basis upon which to make an argument. What you call common sense is in fact ideological fundamentalism. Any system of fundamentalism — communist fundamentalism, Christian fundamentalism, Islamic fundamentalism, fascist fundamentalism — is rightly rejected by free people.

question4u 2 years, 2 months ago

“This plan simplifies their taxes and helps business owners retain more of their profits, which can then be reinvested in their livelihood or the community,”

Potential profits drive expansion, not excess capital. Every successful business owner in Kansas knows that. If there is a potential to increase profits by hiring extra employees, then employers will do so, even if they have to borrow. It's laughable that some people actually buy the argument that a decrease in taxes will cause employers to start hiring. No one is going to add employees unless there are strong indicators of increased potential profits, just as no one is going to let employees go if there are such indicators.

Why hasn't Brownback demanded accountability from businesses that will pay no state income tax? If those businesses are going to reinvest "in their livelihood or the community” then it should be simple enough to document that. Why not give businesses tax breaks proportional to the new hires they make or the additional investment that they make in "their communities"? If Brownback is so confident that his "experiment" will work, why not hold businesses accountable for the tax breaks that they will receive?

The answer is as obvious as the reason that Brownback is working on his spin and Sherriene has the blather machine running.

“There are forces beyond the state’s control,” Brownback spokeswoman Sherriene Jones-Sontag said last week. “There’s still a great deal of uncertainty with the economy.”

If so, then doesn't Kansas need true leadership, not preparation of excuses for "experiments" that fail. Doesn't Brownback have the guts to hold himself accountable? He is no doubt correct that many in Kansas will guzzle any swill that Sherriene pours down their throats. They evidence is clear enough among the posts above. Kansans who don't want a leader who will stand behind his decisions and not start pointing fingers at everyone but himself won't even be able to blame Brownback for what happens if the projected multi-billion-dollar deficit hits the state.

Kansas: The land of experiments and premeditated excuses.

oldbaldguy 2 years, 2 months ago

Sage do you have any first hand experience with communist governments? Do you really believe we will ever head that way? Or is this all blow and go for fellow bloggers?

Tracy Rogers 2 years, 2 months ago

One incident 12 years ago doesn't make a very compelling argument.

jafs 2 years, 2 months ago

Brownback was in fact not elected by the vast majority of Kansans.

He wasn't even elected by the vast majority of eligible voters in KS.

He was elected by about 1/3 of eligible voters in KS.

Those figures are accurate - there was approximately a 50% turnout of eligible voters, and Brownback got about 2/3 of the vote.

2/3 of 1/2 = 1/3

QED

jafs 2 years, 2 months ago

I have asked you not to respond to my posts.

Please honor that request.

And stop lying - he did in fact get about 2/3 of the votes of those who chose to participate. But that's a far cry from being elected by the vast majority of Kansans.

In fact, as shown, it represents the votes of about 1/3 of the eligible voters in KS.

jafs 2 years, 2 months ago

I'm male, and I've requested it twice now. The reasons have to do with your inability to discuss things without resorting to insults, which is clear to all who read your posts. Anybody who can refrain from that is somebody I'm glad to discuss and debate things with, which is also obvious to any who've read my posts.

I'll be forwarding this on to the moderators of the forum.

I have refrained from commenting on any of your posts, until this one, when you responded inappropriately to mine, and will continue to do so, although you haven't requested it.

And, again, you are the one who's lied about the facts - my version is correct.

Portraying the governor as having been elected by the vast majority of Kansans is false, and obviously so, no matter how many times you say it.

Eride 2 years, 2 months ago

The tax change was JUST passed and Brownback is ALREADY blaming others for his plan's failure to achieve the goals he claimed the plan would bring about.

I must be dreaming, what a wonderfully entertaining satire.

Carol Bowen 2 years, 2 months ago

I'd say governor Brownback's strategy is truly transparent.

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