TOPEKA, Kan. (AP) — Republican Gov. Sam Brownback is telling Kansans that the income tax cuts he championed already have started to generate long-term prosperity. But he’s mired in questions about whether recent, short-term revenue drops show that his fiscal policies are endangering the schools, universities and social services that many voters value.
Brownback’s administration has been on the defensive for weeks because the state’s tax collections fell $310 million short of expectations in April and May. If the trend continues, the state could face a projected budget shortfall by June 2015 and new questions about whether tax cuts approved in 2012 and 2013 are squeezing state revenues more than anticipated.
For some conservative GOP legislators, there’s little angst: They promised lower taxes and smaller government and believe they’re delivering both through Brownback’s policies. But as he runs for re-election this year, the governor argues that Kansas can cut income taxes aggressively, boost its economy and ultimately have additional funds for “core” spending, such as aid to public schools and spending on social services.
Brownback sparred last week with top Democrats at a meeting with legislative leaders when they argued that the state’s finances are deteriorating because of his policies. He did more sparring with reporters afterward, chastising them for writing too little about good economic news and bristling when a questioner suggested his tax cuts were designed to force the state budget to shrink.
“The tax cuts were designed to create jobs,” Brownback said. “You guys have heard me say this numerous times. That’s been the real focus.”
The tax cuts championed by Brownback will cut the state’s top income tax rate by 40 percent by 2018, and Kansas already has eliminated personal income taxes for the owners of 191,000 businesses. The governor said last week that latter policy has created a “dynamic situation” in the economy, particularly on the Kansas side in the Kansas City metropolitan area.
But he’s also portrayed himself as a friend of education and defender of vital social services, something that in theory helps him with moderate Republicans and some unaffiliated voters. A new education funding plan will boost aid to poor school districts by $129 million in the next school year to reverse past, recession-driven cuts and meet a Kansas Supreme Court mandate in a lawsuit filed in 2010 by parents and districts.
Brownback acknowledged that he’s been willing to trim or even eliminate spending in some places but added, “You fund your core functions, and you do it well. We’ve increased K-12 funding. We’ve increased higher education funding. We’ve increased things in a number of key functions.”
His debate with Democratic critics over his economic policies has both sides flinging out statistics. His partisans argue that Kansas is booming, with nearly 56,000 new private-sector jobs since Brownback took office in January 2011. His critics say Kansas is lagging behind many states in the region in gross domestic product growth in 2013.
The presumed Democratic nominee for governor this year, Kansas House Minority Leader Paul Davis, argues that Brownback’s tax cuts were reckless and his experiment, a clear failure. He told Brownback during last week’s meeting with legislative leaders that most Kansans see the economy as “relatively stagnant.”
“I’m obviously concerned about the declining revenues,” he said.
Brownback’s administration has attributed the lower-than-anticipated revenues in April and May to investors’ skittishness at the end of 2012 about disputes in Washington over federal tax and budget policies. The state Department of Revenue has said investors claimed capital gains early for 2012 to avoid potentially higher tax rates in 2013, and the effects were felt by most states in tax payments this year.
Brownback’s aides also have said that the big drop-offs are over. Tax collections in June will be scrutinized closely, and if they’re significantly short of expectations again, the administration’s explanation for the disappointing numbers in April and May is likely to lose credibility.
Even if revenues meet expectations going forward, the Legislature’s nonpartisan research staff has projected that a budget shortfall would emerge by July 2016, raising questions about whether the state could sustain its new commitment to poor school districts.
Still, Senate President Susan Wagle, a conservative Wichita Republican, argued that Kansans are bullish about the future and pleased with the path the state is pursuing, giving the GOP large majorities in both legislative chambers.
“They want to see government shrink, and they want to have more money to spend. They want opportunity for new jobs,” Wagle said. “Government has less money to spend, but that’s what the people are asking for.”
But Wagle is in a safe Republican district and won’t have to run again until 2016. Brownback is running statewide, and he’s forced to consider whether there’s enough unhappiness among less conservative Republicans and independent voters for Davis to unseat him.
And so he’s telling Kansans that his long-term vision allows them to have lower taxes coupled with extra spending on the schools, universities and social services that many of them want protected.