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Brownback says media not reporting good economic news. Here's why.

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News outlets in Kansas are not reporting the good news about the Kansas economy, and if they did, voters might feel differently about the impact that Gov. Sam Brownback’s tax policies have had on the state.

That’s the message that Brownback himself has been delivering lately, in talks to various groups around the state, including a recent get-together with the Kansas Press Association board of directors.

So when word of that conversation got back to the news desk, the Lawrence Journal-World asked to meet with the governor and let him make his case. Brownback agreed, and in the course of a 25-minute interview, he laid out his case — complete with a wealth of charts and graphs — with data that he says prove the Kansas economy is in better shape than people give it credit for.

“It just never gets out,” Brownback said at the outset. “That’s what I was complaining about, because we’ve got some really good employment numbers and small business growth numbers in the state, and that just never gets out.”

Much of that, he said, is directly due to the tax cuts he championed in 2012 and 2013. And in the areas where the state’s economy seems to be lagging, Brownback blames global, macroeconomic forces, such as commodity prices in the farm and energy sectors that are beyond the state’s control.

Brownback has good reason to try to shore up his case at this point. His allies in the Legislature who helped push through the tax cuts — at least those who actually ran for re-election — suffered badly in the Aug. 2 primary, and many people say there's a good chance they could suffer more defeats in the Nov. 8 general election.

If 2016 turns out to be a "wave" election, in which the balance of power in the Legislature completely shifts, then Brownback could be in for a tough ride in the last two years of his administration. And although there's every reason to believe that most voters who are motivated on the tax issue have already made up their minds, Brownback has an incentive for trying to make his case while he still has time.

The purpose of the tax cuts, Brownback reminds people, was to spur business development and increase private sector jobs over the long term. And by putting more money in the pockets of individuals, the theory was, that would generate economic activity that would produce revenue for the state from other sources, such as retail sales taxes, to offset the loss of income taxes.

“What that was built upon is, if you get a kind of normal economic situation, that as you cut income taxes, you’ll gain it back in sales,” Brownback said. “That was the theory. That was the experience in some other areas.”

Here are some of the numbers that Brownback cites to make his case.

The border wars. One of the boldest claims Brownback makes is also the most difficult to verify independently. That is the claim that Kansas tax policy has reversed the outflow of economic wealth from the Kansas side of the Kansas City metropolitan area to the Missouri side.

“We were losing tax filers to Missouri for 19 years in a row,” Brownback said. “That’s us losing wealth to Missouri. Enact the tax policy, and boom. We were having out-migration from Kansas the last three years prior. We now have in-migration, and a lot of that’s Missourians moving to Kansas.”

According to one of his charts, based on Internal Revenue Service data, in the three years just before the tax cuts were enacted, Kansans moving across the state line into Missouri were taking with them $150-$200 million a year in adjusted gross income.

But immediately after the tax cuts, in 2013 and 2014, the trend reversed, and now Missourians are moving back, bringing with them about $85 million worth of income.

According to Census Bureau data, however, there was no out-migration of people in the metro area from Kansas to Missouri.

Looking at migration data from 2009 through 2013 for Johnson, Wyandotte and Leavenworth counties on the Kansas side, and Jackson, Clay and Platte counties in Missouri, Kansas was a net winner in migration, gaining 2,396 more people from Missouri than Missouri picked up from Kansas.

“We are not saying we were losing residents to Missouri prior to the tax cuts,” Brownback’s spokeswoman said in an email. “We were gaining residents but that rate tripled following the implementation of the tax policy.”

“We had been losing wealth (and) money to Missouri, but not people,” she continued, “and now we are gaining people from Missouri and seeing wealth transfer in to Kansas as well.”

Business creation. According to data from the Kansas Department of Revenue, Brownback said, roughly 18,000 new businesses filed tax returns in the first two years of the tax plan, either under business names or Social Security numbers that had never shown up in state tax records before.

"And you've got 650 of those in Douglas County," he said pointedly.

Jeannine Koranda, spokeswoman for the Department of Revenue, said that was based on internal analysis of individual tax returns, which are not available to the general public, and no more detailed information about that analysis was available.

But even accepting that the numbers are accurate, the creation of those new businesses has not translated into large numbers of new jobs.

Numbers from the Bureau of Labor Statistics show that since the tax cuts took effect in January 2013, Kansas has added, on a seasonally adjusted basis, only 34,400 new private sector jobs, a growth rate of just 3.1 percent over three and a half years. That’s less than half of the national average of 8 percent growth in private sector employment over that same period.

“We’re a little flat,” Brownback said.

Nor would Brownback say that the job growth Kansas has seen is directly related to his tax policies.

“We don’t have the hard data that I know of to say that because of our business policy, we have this growth in private sector jobs,” he said. “But I do know we’ve hit near record on private sector employment. We’ve got record numbers of new small businesses formed.”

Furthermore, Brownback acknowledged, some new business entities are merely extensions of existing businesses, especially among real estate developers who commonly set up separate entities, known as limited liability corporations, or LLCs, for each individual development project.

But Brownback said even that represents economic growth.

"I’ve talked with developers, and one developer in particular in Douglas County," he said. "They form a new LLC to put the new building in. He’s out of Wichita, but he says, ‘Look, I’m using this to build buildings — the tax benefit of being able to put this, the revenue generated off of it.’ And he says we’re doing this in Lawrence. And you’ve got a lot of building going on."

Individual income tax collections. The tax cuts that Brownback championed came in two phases. In 2012, lawmakers passed a bill that slashed individual income tax rates overall and completely exempted income derived from certain kinds of business entities. The following year, lawmakers attempted to fix some technical problems in the original bill, but also passed a formula, which some called the "glide path to zero," that was meant to phase out income taxes altogether over a period of time.

In the first full fiscal year of the tax cuts, 2014, individual income tax receipts in Kansas fell 24 percent, to 2.2 billion. They bounced back slightly by 2.7 percent in fiscal year 2015, to nearly $2.3 billion, but fell again in the most recent fiscal year.

In the fiscal year that just ended June 30, Kansas collected about $2.25 billion in individual income taxes, still 23 percent less than the $2.9 billion collected in fiscal year 2013, before the full impact of the tax cuts took effect.

According to the Legislature's nonpartisan Research Department, the full impact of the tax cuts is that Kansas is now collecting about $920 million less each year than it would have if lawmakers had made no changes to the tax code.

But so far in the new fiscal year, Brownback said, individual income tax receipts have started to recover. In the first quarter of the new fiscal year, receipts have grown by $25 million, or nearly 5 percent over the same period last year, and they've actually beaten the official estimates by nearly $1.7 million.

"My point is, when people criticize the tax policy, the places where we’re not getting the yield are corporate taxes, which we didn’t do anything to; sales taxes, which we actually raised; and personal income. That’s the one where we’re actually ahead of last year, and we’re ahead of the estimate. That’s the one we cut."

But if income tax receipts are rising, it does not appear that the personal income of Kansans overall is changing very much. According to data from the Bureau of Economic Analysis, growth in per-capita personal income in Kansas has not kept pace with the rest of the nation.

Per capita personal income is total personal income divided by total quarterly population estimates. (Source: U.S. Bureau of Economic Analysis)

Per capita personal income is total personal income divided by total quarterly population estimates. (Source: U.S. Bureau of Economic Analysis)

Sales tax receipts. One of the most disappointing revenue figures that have been reported since the tax cuts were enacted is the lackluster growth in retail sales. That was, after all, a built-in assumption about cutting income taxes — that it would put more money in people’s pockets and spur consumer spending.

In fiscal year 2014, the first full year after the tax cuts, retail sales tax collections actually declined 3.7 percent, to $$2.1 billion. That was also the year that the sales tax rate dropped slightly, the result of a previous tax plan enacted by former Gov. Mark Parkinson in 2010 that included a “temporary” increase in the wake of the Great Recession.

Since 2014, sales tax have grown slightly, but not nearly at the pace that budget analysts had expected. In the most recent fiscal year, sales taxes grew 6.2 percent over the previous year. Of that, however, 5.7 percent can be attributed to the 2015 Legislature raising the sales tax rate, leaving only half a percent attributable to increased consumer spending.

The rural economy. Brownback says that has begun to turn around in the new fiscal year, with sales tax receipts in the first quarter beating the same period last year, and exceeding current estimates. But he acknowledges that hasn’t been even throughout the state.

“The urban areas are working. The rural areas are not,” he said. “If you add up all the rurals, it does actually matter.”

The rural economy, Brownback said, has been beset by global economic factors that state government is unable to control.

“We cannot overcome a huge falloff in oil prices, or a huge falloff in cattle prices and wheat. … You go west of Salina, it’s basically the pits. You go into the oil areas and gas areas, really bad. And your ag area is not very good, but the urban, where you’ve got a more normal situation.

“We’re flowing against a bad commodity market for us that normally hammers Kansas pretty hard,” Brownback said. “Because once you drop in ag prices, they don’t buy farm equipment; then our farm equipment manufacturers cut back employment. Once you’re not drilling for oil, you don’t have those employment jobs.”

“The urban areas are working. The rural are not,” he said. “If you add up all the rurals, it does actually matter.”

But the Kansas economy has always been moved by global economic forces that are beyond state government’s ability to control. And some have suggested it was folly from the beginning to think that those forces could be overcome with changes in the state of Kansas income tax code.

“I disagree with that,” Brownback said. “I agree we can’t impact the price of oil or the price of cattle. That’s a global commodity market. But I do think you can impact people moving. I think you can impact the growth of business, or decline over time. And we’ve got the data to show that’s indeed the case.”

Comments

Dorothy Hoyt-Reed 6 months, 1 week ago

This man is clueless, isn't he. Kansas has always supported their schools and their good roads. He is messing up both. And if his experiment really was creating jobs, then he would have those numbers. It would not be that hard to research those who aren't paying taxes and find out how they are spending that money. He hasn't done it, because he knows the results would make him look bad. Not a real experiment if you can't measure the results. But what do expect from someone who rejects science?

And a good leader would try and diversify the economic projects in our state, instead of relying on the same old, same old. Why isn't his office actively trying to bring in different kinds of businesses?

David Smith 6 months, 1 week ago

Kansas was doing good when I left there. Not much investment in low income but they made up for it in helping those who were trying to help themselves. He just wanted to get greedy. That's it. Give to the rich take from the rest. Even at the cost of the kids education he didn't even care. Too bad the residents are the ones who are going to pay for it.

Tim Mayer 6 months, 1 week ago

Kansas did this to themselves . They voted for this disgrace twice . I can't wait to see who Kansas elect this time around to fight the " Evil " Hillary ! Kansans would vote in Old Charlie Manson if he put an R next to his name and promised to fight the " Evil " Hillary every step of the way !

Richard Quinlan 6 months, 1 week ago

Poor Sam , always the last to know , never in on the joke , and wants to buy a corvair. Nobody told him trickle on the people economics is just a scheme to distribute tax proceeds to the richest of rich. He obviously is unable to read also , poor thing , or he would know this is a huge scam and has never worked at all , never , just 8 years ago it put the US in recession . Sam , there are plenty of pro-business loopholes built in to all the state and federal tax codes , you did'nt have to give away all the states revenue you moron. Please get on some medication soon , it may help with the delusions.

Joe Blackford II 6 months, 1 week ago

I hear it again, Sam the Sham & the SayNos' tune "My Numbers Don't Add Up (to nuthin' much)"

The Sham's lucrative contract with Chuck & Dave's PAYOLA RECORDS has bankrolled Brownback's Atlas of Road Maps To Nowhere, an experimental genre of undelivered promises evoking mournful wails from even the most ardent listeners.

Larry Sturm 6 months, 1 week ago

The problem is not the news media the problem is Brownback he sounds just like Trump it is everybody Else's fault.

Adrian Turner 6 months, 1 week ago

Wouldn't be great if Brownback eliminated the married tax?

This is the most ridiculous tax in the WORLD!!!

I say that this why people from Kansas flock to Missouri to get away from unfair taxation.

Wait a minute..............Isn't the above sentence why we fled England?

Tony Peterson 6 months, 1 week ago

It would be better for everyone if Kansas eliminated Brownback.

Dorothy Hoyt-Reed 6 months, 1 week ago

Marriage tax? Are you talking about paying for your marriage license? You really do have to for the paperwork and the people doing the paperwork, you know. I hope you pay the person performing the ceremony. Most preachers and judges do not charge, but they should be given a gift of money anyway.

Actually most people fled England and other parts of Europe for many reasons. Some weren't the oldest sibling, so they didn't get to inherit any land, some were poor and looking for some land; some were fleeing religious persecution.

Now we did revolt against England, because we did not have any representation in the English parliament and they were exacting taxes - taxation without representation. Unfortunately, that is not the case here. We are represented. But people in Kansas tend to vote for the person with the R next to their name. If they truly want to be represented, then they would get off their duffs and get informed and vote for the person who most represents what they want, and not what is fed to them on Facebook, or not just a party that has had some radical changes in recent year. Of course, that's kind of what happened in the Republican primary.

Tony Peterson 6 months, 1 week ago

Uhhhhhh, not following your math Sammy. It's impossible for tax receipts to have grown by $25 million when every month in the first quarter the receipts have fallen far short of projections. Last month alone the receipts were $45 million short.

"But so far in the new fiscal year, Brownback said, individual income tax receipts have started to recover. In the first quarter of the new fiscal year, receipts have grown by $25 million, or nearly 5 percent over the same period last year, and they've actually beaten the official estimates by nearly $1.7 million."

Kendall Simmons 6 months, 1 week ago

The deal is that your figures/argument relate to ALL tax receipts, e.g. individual income, sales tax, corporate income, while Brownie was talking ONLY about "individual income tax receipts".

Brownie cherry-picks like crazy, so we've got to be VERY careful when reading his claims or we miss important caveats that he sincerely hopes we'll miss.

Tony Peterson 6 months, 1 week ago

But there's also the bottom line part he never talks about. Individual receipts may have gone up $25 million but those were more than wiped out by shortfalls in other areas. It's easy to spin numbers to your advantage on paper.

It's the positive or negative number at the very end that's the important one.

David Smith 6 months, 1 week ago

Brwonback created another dustbowl. He's keenly aware that his was the great economical right wing experiment and it has shown to be a dismal failure. The rest of the country is watching. Now in shock. The rest of us thinking OMG this is what could become of us if we follow this dogma.

Dorothy Hoyt-Reed 6 months, 1 week ago

And yet, look at what Trump is supporting. And he's going to lower everyone's taxes, add more money to the military (probably military contractors, not the soldiers), build a wall, and somehow magically not have a deficit, while paying off the debt. Kind of like, let's invade Iraq, and not pay for it. And if his supporter really believe he can do that, then we should go into the business of selling Brooklyn bridges.

Mark McClain 6 months, 1 week ago

Using Brownback's numbers tax revenues are still $920M lower than 2013 receipts. personal income tax receipts are up $25M and sales tax receipts are still down, even after being increased on some items. I am having a very hard time seeing anything positive about Sam's defense of his economic policies. He can talk all he wants but the numbers remain bad. The only thing Brownback demonstrated was his ability to make excuses and assign blame to a variety of areas, while accepting zero blame for himself.

Shane Cheung 6 months, 1 week ago

He put the interests of the Koch Brothers before those of everyday hard working Kansans. You all suffered while the Koch Brothers got richer and you all got poorer. Brownback got richer too. Once he leaves office, he will be taken care of.

Michael Kort 6 months, 1 week ago

Brownback says......BLAH,........BLAH, BLAH,........BLAH, BLAH..........and when will Ks State Revenues meet its' own needs ?......NEVER.... because they got the State Government in the bath tub and are drowning it in debt and slitting its' throat with tax cuts that will never work out because they are not supposed to work out !

Robert Brock 6 months, 1 week ago

Kansas is in a heated battle with Mississippi to see which state hits bottom first. Mississippi had a huge lead; Kansas is closing the gap fast.

John Cassel 6 months, 1 week ago

The governor cannot fool the good people of Kansas. The economic fallacy of trickle down economics (tax cuts mean companies will spend the free cash on jobs and not put it in their pocket- riiiiight). The huge hole it created in the states budget ($900 M!) by the lost revenue is only slightly worse than the upward redistribution of wealth by raising the sales tax on actual consumers. Rich people do not need more diapers, boats, or houses so the income tax cuts go in rich peoples pockets and the people at the economic bottom pay more in sales tax. The idea that Republicans or Public Cans (they always remove a syllable from the Democrat-ic Party so let's return the favor) know anything about economics (tax cuts and deregulation sound familiar?) is laughable. Jobs, jobs, jobs! We are gonna win so much you will get tired of winning! This is the crap you buy so enjoy your governor who is selling the same fetid future for your state.

Richard Crank 6 months, 1 week ago

I just hope for him (Brownback) to be gone asap, with the least possible damage between now and then, and for Trump to never have the same chance to inflict this catastrophic damage on the entire nation while whispering his mantra ad nauseum ... "This is good. It will work. This is good. It will ..."

Robert Moreland 6 months, 1 week ago

Noticing a trend here. When the GOP is responsible for something negative; of course it is deflect ... when they are not in power it is the "governments" fault ... when they are in power "it is the medias" fault for being negative. The gist is the GOP never, never, never ... takes responsibility for anything it does; and everything it does hurts the US, its constitution, its people, and on nearly every level. The only ones that are helped are trans-national globalist oligarchs and their associated corporations that just separate our country from our wealth.

Brownback is just attempting to buy more time with what amounts to a "yeah but" ... it is not that "bad". It is like saying ... hey you've only been robbed a little.

Kelly O'Connor 6 months, 1 week ago

Brownback is clueless and unfortunately a good percentage od Kansans e buying his crap. There are a lot more people leaving this state than moving to it. Even the retiring farmers are no longer moving to town, they are moving out of state. Now that he sees his regime crumbling he is playing the "Oh poor pitiful misunderstood Sam card, yes he is misunderstood as his policies reflect a crumbling Kansas. He has caused decades of damage to this state, and we will be a lot better off when he too hits the highway....

Dave Kruse 6 months, 1 week ago

The media is not reporting good economic news in Kansas because there is none to report.

We find ourselves in the failed state of Kansas, now in the fifth year of the Brownbackian Dark Ages, as such things are reckoned.

Somehow, the fact that Kansas' status as a supply-side lab rat has dropped the state down a political garbage chute the likes of which hasn't been seen since they shredded the Articles of Confederation is beginning to seep under the guardhouses of the gated communities.

The head of a healthcare company is fleeing to the Missouri border and he's not shy about telling the world why.

From Pathfinder Health Innovations CEO Jeff Blackwood:

It wasn't just that Brownback was conservative; it was that he is seen as a tool of the Koch brothers and ALEC, a conservative think tank and lobbying organization.

Brownback used his influence and funding to eliminate "moderate" republicans from the Kansas legislature and install his hand-picked conservative cronies.

He couldn't do the same with the Kansas Supreme Court, which has ruled a number of the conservative legislature's laws as unconstitutional, so Brownback's administration decided to threaten to cut off funding to the court system and is actively pursuing legislation to impeach the Supreme Court.

Kansas has become a test center of "trickle down" economics, espoused by economist Arthur Laffer during the Reagan years.

Nowhere has there been as thorough an implementation of Laffer's policy recommendations… and nowhere has there been as dramatic a failure of government.

Under Brownback's direction, Kansas implemented an unprecedented tax cut in 2012, eliminating taxes for LLCs and professional firms (for full disclosure, PHI is a C Corporation) and making the largest cuts in the highest tax brackets.

He shifted taxes to create a heavier burden on property and sales taxes, which typically represent a larger burden on lower income brackets.

Brownback declared that this tax cut would be a "shot of adrenaline" for the Kansas economy, but the reality is that the tax cuts have had the opposite effect.

Kansas lags neighboring states in job growth.

For 11 of the last 12 months, Kansas has dramatically missed revenue targets, falling deeper in debt and facing another round of degraded bond ratings.

The worst part is that the burdens for the shortfalls rest on the shoulders of those who can least afford it – children and the developmentally disabled.

Stupid gets what stupid votes for when voting for a tea bag.

MerriAnnie Smith 6 months, 1 week ago

Second article I've read today that seems as if it's trying to convince Kansans that Brownback's Trickle Down is okay.

Anybody here follow everything Brownback said here... understood why he think's it means his tax cuts are working?

I read it twice and I have a masters degree plus. I'm not precisely stoopid, and reading comprehension hasn't typically been a big problem for me... but I didn't follow precisely how (in a proven and clear way) his Trickle Down strategy is working.

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