The news isn’t getting any better for Kansas legislators.
With only a handful of days left in the 2017 legislative session, the Legislature still doesn’t have an appropriations bill and still hasn’t figured out a school finance plan. And the economic news is getting worse, not better.
Last week, the Center for Economic Development and Business Research at Wichita State University released an updated employment forecast for the state. The news wasn’t good. The report forecasts job growth of 0.5 percent this year, half the average of 1 percent for the past five years. Modest job growth of 1.4 percent is predicted in the Kansas City, Wichita and Topeka metro areas but the rest of the state is expected to experience job losses of about 1 percent.
Jeremy Hill, the director of the center, said the Kansas economy may have peaked.
“There are now multiple signs of an economy that is losing steam,” Hill said. “Although the forecast calls for employment growth at half of the rate over the past five years, increased caution should be added as a state-led recession is potentially around the corner.”
That’s a problem for a Legislature trying to plug a billion-dollar hole in the state’s budget. Any legislators holding out hope that an economic revival is just around the corner need to wake up and smell the coffee. With a slowing economy, sales taxes aren’t going to produce the kind of revenue the state needs to address its woes. And property taxes — most of which are dedicated to education funding — aren’t really an option either.
That brings legislators back to where they started the session: income taxes. There simply is no way around addressing the state’s income tax structure and, more specifically, the broad-based income tax cuts implemented by legislators in 2012 and 2013 at the urging of Gov. Sam Brownback. Those tax cuts have crippled state revenues for five consecutive years and dug the billion-dollar hole the state faces.
Brownback has said repeatedly that the tax cuts will stimulate Kansas’ economy and eventually result in growth. But the evidence is now solidly to the contrary and as the Center for Economic Development and Business Research report showed, there’s no sign that the economy is going to pick up pace anytime soon.
Legislators have dabbled with addressing tax reform. They passed a bill in February that the governor vetoed and last week, the House toyed with a plan to repeal the tax cuts altogether before abandoning it when the Senate called House legislators’ bluff. Instead, lawmakers shifted focus toward dabbling with increasing taxes on tobacco and alcohol and perhaps an increased fee on utilities. In fact, the House was reportedly working on a new tax plan that lawmakers have already dubbed the kitchen sink plan because it includes every kind of tax or fee imaginable.
This is no way to run a state. Surely, lawmakers understand that the only way to fix the state’s fiscal woes is to repeal or significantly modify the Brownback tax cuts. The question is, do they have the political courage to do so?