State history shows tax cuts won't guarantee prosperity.
Gov. Sam Brownback backs reductions in the state income and sales taxes. A new study by the Kansas Legislature's Research Department estimates his tax cuts would cause a budget shortfall of more than $700 million by July 2018.
The administration protested mightily. No, its spokesman said, the growth caused by tax cuts would produce a surplus of $138 million by mid-2018.
Legislative Research acting director Raney Gilliland said his department had used the same methods to calculate the consequence of the tax cuts that it had always used.
Revenue Secretary Nick Jordan said projecting future budgets is always chancy and commented, "There's a lot of time for growth. There's a lot of time for budget adjustments," between now and 2018.
The safe, conservative approach for the lawmakers to take is to go with Legislative Research. ... It assumes a certain amount of budget growth because budget growth to cover inflation, the aging population, infrastructure demands and other known factors occurs predictably. ...
Legislative Research calculates lowering tax rates will result in lower state revenue, all other factors being equal. ...
But the administration has persuaded itself that lowering tax rates will result in enough additional economic growth in the Kansas economy that the state will collect more even though it charges taxpayers less.
Now, the administration may be right. But it would not be a good idea to bet the farm on it. ...
Kansas is not, and never has been, a high tax state. ... There is, in fact, nothing in Kansas history that lends credence to the theory that cutting income and sales taxes will produce a greater rate of economic growth than the slow, but steady, recovery now under way.
Kansas is, however, a low-spending state. The Legislature and the state's governor cut spending for its public schools, its universities and its highways and has a huge waiting list of disabled citizens now without critically needed services.
Those reductions were made to keep the budget balanced in the recession. That funding should be restored before tax cuts are made for reasons too obvious to require listing.
When those highest priority needs have been met, then Kansas can experiment with some short-term, limited impact tax reductions to see if supply-side, trickle-down economics truly creates a magic wand that makes more from less.
-- The Iola Register