Acting Revenue Secretary Sam Williams testifies before the Senate Assessment and Taxation Committee to defend Gov. Sam Brownback's tax policies.

Topeka ? While Gov. Sam Brownback was preparing to deliver his State of the State address Tuesday, his nominee for Kansas Secretary of Revenue was laying out the case for keeping the tax cuts that Brownback championed in 2012.

Speaking to the Senate tax committee Tuesday morning, Sam Williams conceded that estimates made in 2012 about the impact those tax cuts would have on the economy were “too aggressive,” and that forecasters did not realize how a “rural recession” would affect future state revenues.

But he continued to insist that the basic principle behind the 2012 tax cuts is sound.

“I want to remind us, first of all, of the purpose of why the 2012 law was created,” Sam Williams told the Senate tax committee Tuesday morning. “It’s based on the premise that small business is the engine that creates jobs in the economy.

“This policy was created to allow individuals to make independent decisions with money they can have in their pocket by reducing taxes to create jobs,” Williams said.

During his State of the State address later that day, Brownback urged lawmakers not to reverse those tax policies, particularly one that exempted the owners of more than 330,000 farms and business entities from paying income taxes at all.

Acting Revenue Secretary Sam Williams testifies before the Senate Assessment and Taxation Committee to defend Gov. Sam Brownback's tax policies.

Williams, who is expected to come up for confirmation hearings later in the session, argued that the tax commonly known as the “LLC exemption” which has exempted more than 330,000 farmers and business owners from paying any state income tax, has been successful in sparking new business growth in Kansas.

But he said the persistent revenue shortfalls the state has experienced since then are not due to the tax cuts themselves, but rather a faulty forecasting process and a prolonged “rural recession.”

“Because of various reasons, at the time of the 2012 bill, when the fiscal notes were written, assumptions were too aggressive in that fiscal note, and that was compounded in the (revenue estimating) process,” Williams said.

“Also, I think it’s important to understand what has been going on in the economy,” he said. “The last five years, the revenues in the state of Kansas have increased about 0.3 percent each year. In a normal economy, our receipts would have increased at a 2.6 percent annual rate. … if we had just grown revenues at a normal rate, we would not be sitting in the position we are in today.”

Williams specifically cited declining oil and gas prices and low farm commodity prices for lowering personal income in rural counties, resulting in lower-than-expected sales tax collections.

The Brownback administration has been furiously defending the 2012 tax cuts because the 2016 elections produced a shift in both the House and Senate in favor of Democrats and more moderate Republicans.

More than one-third of the members of the House and Senate this year are incoming freshmen, and many of them campaigned on a promise to reverse Brownback’s tax policies, particularly the LLC exemption.

Sen. Marci Francisco, D-Lawrence, took issue with a statement in a handout that Williams had used which said the “key question” in the tax policy debate is, “who is best suited to grow the Kansas economy, the government or the private sector?”

Acting Revenue Secretary Sam Williams responds to questions from Sen. Marci Francisco, D-Lawrence, during a hearing in the Senate Assessment and Taxation Committee.

“I understand that it’s important to put money back in the pockets of families and individuals, but I don’t see them as the ones that are going to be building and repairing our highways,” Francisco said.

Sen. Tom Holland, D-Baldwin City, who is the ranking minority member on the tax panel, said after the hearing he doesn’t accept the idea that the state’s financial problems are being caused by a “rural recession.”

“Make no mistake. Yes there is a recession in certain parts of our state,” Holland said. “But once again, it’s as plain as the nose on your face, we have a structural deficit problem because the tax program in 2012 that’s been implemented. And we have to address that. And to try brush this off (by saying), ‘Well, other states are seeing the same trends’ — well, yes they are, but they’re not seeing the same financial disasters we have as a result of what we’ve implemented.”