Where are we headed?
Published on -2/26/2013, 9:24 AM
Until an investigative reporter for the Wichita Eagle uncovered a massive discrepancy in the numbers Gov. Sam Brownback was touting, the state's chief executive was able to boast of the remarkable turnaround Kansas was experiencing since he entered office.
Crediting his administration for enacting $2 billion in budget cuts in presentations around the state, the governor began offering other reforms to downsize and streamline government. At the top of Brownback's wish list was a dramatic cut in state income taxes. Other big-ticket items included less interference from the judicial branch, more control over the distribution of education funding, not only a refusal to expand the Medicaid program under the federal health care overhaul but privatizing the administration of the state network, a reshuffling of departments, and further calls for going down the "glide path" to zero state income tax.
Most legislators who didn't endorse the governor's plan were eliminated during the 2012 elections. Brownback is surrounded by enough "yes" men and women to push through whatever policies he'd like. Minions caution the public to give the Roadmap for Kansas time to take hold and produce positive economic results. Oh, and in the meantime, expect a little belt-tightening.
As the aforementioned journalist discovered, however, "Brownback has blamed his predecessor for a $2ââ billion spending hike that never happened and taken credit for spending cuts he didn't actually make."
Budget Director Steve Anderson since has stepped up as the fall guy, apologizing for passing along incorrect numbers to the governor. Brownback, meanwhile, has not backtracked at all. Fellow conservative legislators downplay the error, assuring the public the mistaken figure was not used in any of their budget calculations.
While that likely is accurate, the $2 billion has been used to set the state on its current course. The public was led to believe this governor produced results by doing things differently. Support for Brownback and his policies was built on this salt foundation.
"Fiscal discipline has seemingly become a lost art in government," the governor said in last month's State of the State address.
Support for Brownback's path is so strong, even most legislators don't believe the fiscal projections from the nonpartisan Kansas Legislative Research Department. While acknowledging the planned collective tax relief will surpass $4.5 billion during the next six years, collective budget shortfalls at current spending will hit $2.5 billion during the same time frame.
In order to shore up state revenues, Brownback's administration wants to eliminate the mortgage interest deduction as well as tax credits that help offset food and childcare expenses, raid the highway fund, and block the scheduled decrease in state sales tax. Already in effect is a wholesale reduction in state aid to needy families. As these measures will not be enough to cover the gap, the state will be forced to cut most everything it funds -- including education.
Why would Gov. Brownback be willing to risk the livelihoods and mere subsistence levels of hundreds of thousands of Kansans while only the well-off receive any net financial gain? And why are other states looking to Kansas as a model of fiscal constraint?
Because tax-cut guru and former presidential budget director Arthur Laffer theorized eliminating income tax would spur economic growth. And the American Legislative Exchange Council, which offers boilerplate legislation to states that benefits big business interests, is a big believer in the so-called Laffer Curve. Gov. Brownback said eliminating income taxes will be "a shot of adrenaline into the heart of the Kansas economy."
The bond credit rating organization Moody's doesn't think so. It said the tax cuts will result in "no improvement in economic growth." Finance experts who dissected Laffer's hypothesis concluded the consultant manipulated numbers to arrive at his conclusions. The report "Selling Snake Oil to the States" outlines how Laffer's tax-cut approach actually decreases per capita income.
When flawed hypotheses and incorrect data are relied upon to predict future economic growth, we can't help but worry. Kansas is not headed for a short period of belt-tightening. We are driving straight into a self-inflicted financial crisis that will adversely affect the lower and middle classes.
Editorial by Patrick Lowry