Davis proposes postponing future Kansas tax cuts

? Rep. Paul Davis, of Lawrence, the Democratic candidate for governor, on Monday called for postponing any further tax cuts enacted by Republican Gov. Sam Brownback until public education funding is restored to its pre-recession levels.

Davis also named two former lieutenant governors as senior economic advisers to his campaign: Republican Gary Sherrer, who served under Gov. Bill Graves from 1996 to 2003, and Democrat John Moore, who served under Gov. Kathleen Sebelius during her first term from 2003 to 2007.

The announcements came on the heels of a barrage of reports by national news analysts who argued the Brownback tax cuts have failed to produce the economic stimulus he promised, as well as a new public opinion poll showing Brownback trailing Davis by 6 percentage points in his bid for re-election.

Speaking at campaign events in Kansas City and Wichita, Davis said the cuts enacted by Brownback and the Republican-controlled Legislature have created a budget crisis that is projected to leave the state $1.2 billion in the hole over the next five years.

“We cannot clean up Sam Brownback’s mess overnight,” Davis said. “What I’m proposing are commonsense ideas that prioritize our public schools, incentivize real job creation and empower communities to maximize their unique opportunities for growth.”

Brownback’s office did not respond to requests for comment.

His proposal would effectively freeze state income tax rates at their current level, postponing changes in both tax rates and deductions that lawmakers approved in 2013.

Under that law, the current bottom bracket of 3 percent is being reduced this year to 2.7 percent, and the current top bracket of 4.9 percent is being reduced to 4.8 percent.

The law provides further reductions in the tax rates each year from 2015 through 2018. From that point forward, automatic tax cuts would be triggered whenever tax receipts for either of the two brackets exceeds the previous year’s revenues by 2 percent or more.

In addition, though, the law partially offsets the impact of those cuts by also cutting certain kinds of deductions taxpayers can claim. With the exception of charitable deductions, which remain in full force, other kinds of deductions are scheduled to be reduced by 35 percent this year; 40 percent in 2015; 45 percent in 2016; and 50 percent in tax year 2017 and beyond.

Those changes, which followed on the heels of a massive package of tax cuts enacted the year before, were estimated at the time to result in $341 million in reduced revenue to the state over the next five years.

But Davis did not propose repealing those cuts altogether. Instead, he proposed forming a bipartisan commission to study “accountability measures within the tax code and targeted incentives for job growth,” as well as proposals to reduce local property taxes, which he said have increased by $400 million statewide as school districts and local governments have absorbed the cost of budget cuts enacted by the state.

“I think we’ve got to recognize that we have a crisis we have to deal with, and we have to find a common-sense path to get out of it,” Davis said. “We also have to recognize that there are many supporters of the Brownback experiment in the Legislature, although I think there will be fewer of them after November.”

Mixed economic reports

When he signed the first round of tax cuts into law in 2012, Brownback said they would act like “an adrenaline shot to the heart” of the Kansas economy.

He estimated they would create 22,900 new jobs, give $2 billion more in disposable income to Kansans and increase population by 35,740, in addition to normal population growth.

So far, however, there has been little indication any of that has taken place.

GDP growth rates for U.S., Kansas and neighboring states, 2011-2013. (Source: U.S. Bureau of Economic Analysis.)

According to the Bureau of Labor Statistics, from May 2013 to May 2014, private sector employment in Kansas grew by 14,800 jobs, or about 1.3 percent. But that was slower than the national growth rate of 1.9 percent. It was also slower than private sector job growth in some neighboring states, including Colorado (3.3 percent), Missouri (1.6 percent) and Oklahoma (2.2 percent).

On the other hand, estimates of gross state product — a larger measure of the state’s overall economy — show that from 2012 to 2013, the Kansas economy grew 3.67 percent, slightly outpacing the national growth rate, after a year of lagging behind the national average.

Still, other neighboring states saw their economies grow at more robust rates: 5.71 percent for Colorado; 6.36 percent for Nebraska; and 6.21 percent for Oklahoma.