Kansas was three Senate votes shy last week of repealing Gov. Sam Brownback’s disastrous 2012 tax policy. The governor had vetoed the bipartisan centrist solution to putting the state’s finances back in order — and within hours the House of Representatives voted to override him. Later on Wednesday, the Senate vote 24-16 to override, but 27 votes were needed.
So close. Close enough, in fact, that we remain encouraged this year’s legislative body will find a way to restore business and personal income taxes to levels high enough to support the bare-boned state budget.
It will remain an uphill fight. In vetoing the measure, which would have raised almost $600 million a year, Brownback said it was a “punitive” increase and kept bringing up its “retroactive” nature.
“We must not choose to resolve budget challenges on the backs of middle-income Kansans with retroactive personal income tax increases,” Brownback said.
This coming from a governor who in 2015 ramrodded through the largest sales tax increase in state history, has raided transportation and retirement accounts, slashed funding for education, mental health, law enforcement, the arts and most every function the state is involved in — all to protect tax cuts for businesses and wealthy individuals that didn’t result in the jobs or economic activity Brownback promised.
When one considers the 2012 income tax cuts, the accompanying elimination of several deductions, and the 2015 sales tax hike, it is true most Kansans have fared better. Only the poorest 20 percent ended up paying $200 per year more in taxes than if no changes had taken place. The top 1 percent? They are averaging $25,000 less in taxes.
The result was an extremely regressive shift in tax policy. With the ensuing economic downturn, it was merely a transfer of tax liability from the rich to the poor — and the difference showing up as a huge deficit in the state’s annual budget.
The current Legislature merely was attempting what they promised — to undo the unsustainable cuts and restore structural balance to state finances. What Brownback called a “punitive” increase on the middle class would have resulted in $22.75 extra per year for a family of four making $50,000. That same family making $100,000 would face a $217.25 increase.
Large tax liability increases would be faced by the same businesses and wealthy individuals who’ve been reaping the rewards for the past five years. A family of four making $250,000 would see an almost $1,600 increase in taxes — although even the proposed amount would be lower than what the family paid before the 2012 cuts kicked in. The plan also would have brought hundreds of thousands of business owners back to the ranks of tax-paying citizens.
As for the “retroactivity” the governor and the small number of senators who helped sustain the veto were complaining about? As only two months have gone by since Jan. 1, divide any of the increases by six. Brownback was worried about $3.50 for the $50,000 family; $36 for the $100,00 earners; and $265 for the $250,000 household.
The governor’s arguments are fictitious, including claims his own budget is structurally balanced. We realize Brownback believes himself, but we don’t.
As it turns out, neither do credit ratings agencies. This week, Moody’s said the veto was a “credit negative.”
The agency did not downgrade the state’s credit, something that’s happened repeatedly since Brownback’s policies took effect, but senior analyst Dan Seymour told the Topeka Capital-Journal the “state’s credit may be at risk in the future.”
“With the state for now sticking with a lower-tax policy, Kansas will continue to struggle to balance its budget, consider deferring pension contributions again, and drain its highway fund of funding for crucial transportation projects,” Seymour said. “Continuing to resort to stop-gap measures that do not resolve, or may even worsen, the state’s long-term structural problems would intensify the pressure on Kansas’ credit quality.”
Legislators have this week off to contemplate their next move. The newly restored moderate coalition has facts on their side, a majority of votes in both chambers and the support of the people. That should be enough for a winning hand.
Editorial by Patrick Lowry