The Dire Condition of Kansas’ State Budget

Kansas State Budget

State of Kansas

In 2012, Kansas governor Sam Brownback and the state legislature passed a measure to reduce state income tax rates for all Kansans and eliminate income tax for some 300,000 LLCs. Brownback and his fellow statesmen reasoned that such a measure would re-energize the state economy and promote job creation; neither Brownback nor any of the legislators believed that such a reduction would have a net negative impact of the state pocketbook. As it turns out, the cuts — which only took effect in 2014 — have led to a massive downfall in tax revenue and prompted a variety of new measures in order to cover the shortage.

The figures for the most recent fiscal years show the extent of the problem with unmistakable clarity. In 2013, the state of Kansas brought in $2.931 billion; this was a modest increase from the $2.908 billion which was collected in 2012. In 2016, Kansas collected a startlingly low $2.249 billion. To put it differently, as a result of the cuts, in 2016 Kansas collected roughly $650 million less in individual income tax dollars than in every year prior to the passing of the cuts. Though all positive intent may be imparted to him, the governor’s actions have created a distressful predicament for the state’s budget.

Kansas has actually lost 700 jobs over the course of the past year and currently ranks sixth worst in the nation in terms of rate of job growth. In response to the revenue downfall, the state has been compelled to divert more than $1 billion away from road improvements, implement a sizable sales tax increase, slash tens of millions of dollars from higher education and exhaust all of its cash reserves. Though they were intended to promote economic growth, given the consequences which have followed it is impossible to call the tax cuts of 2012 anything but a failure.

The governor has attempted to downplay the role of the tax cuts in creating the financial quandary: he’s alleged that recent financial projections have been overly optimistic, he’s highlighted the poor performance of the farm and oil industries, and he’s also reminded everyone that Kansas brought in more money in 2016 than in 2015. But these attempts ultimately fail to excuse the fact that, so far, the 2012 tax cuts have failed to deliver the benefits he promised and have led to the awful financial situation we see today.

Image credit: davecito

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Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

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