By Edward M. Eveld
April 27, 2016
They’re dubbing it “Option 4.”
Several advocacy groups held a joint news conference at the Kansas Statehouse on Wednesday to reject Gov. Sam Brownback’s three options to fill a big budget hole. They called instead for an end to the governor’s “failed tax experiment.”
Option 4, they said, is to repeal the state income tax cut and a business tax exemption Brownback championed and the Legislature approved in 2012 and 2013. The groups blame the tax reductions for the state’s ongoing budget woes.
The Legislature reconvened Wednesday after its annual spring recess with the budget the most urgent business. Brownback recommended three options last week to address a $290 million budget shortfall through June 2017, but a change to his tax policy was not one of them.
“The options we’ve been given are not solutions,” said Duane Goosen, senior fellow with the Kansas Center for Economic Growth. “All of these options have already been overutilized in the past five years as short-term budget stopgaps.”
The cost of the tax cuts added to the pain of the Great Recession have created a dire situation for the state, Goosen said.
Some lawmakers want to roll back the tax exemption, which is used by about 330,000 businesses and costs the state more than $200 million a year. A Senate committee will hold a hearing Thursday on a measure that would restore taxes on the wage income for those businesses. There’s no proposal under consideration in the Legislature to reverse the individual income tax rate cut.
Brownback has maintained that the state’s budget problems are due to a sluggish economy and opposes any action that would raise taxes.
Brownback’s budget plan would take $185 million from the state highway fund. The options he recommended to the Legislature included delaying a payment to the state employees pension plan, across-the-board cuts to most agencies including K-12 public schools or selling off a portion of future payments the state receives annually from a tobacco lawsuit settlement.
Annie McKay, executive director of the Kansas Center for Economic Growth, said Brownback’s tax policy is costing the state $1 billion in revenue. The way to fix the chronic budget shortages and to rebuild state operations and services is to reverse the tax cuts, she said.
“The only proposal lawmakers should be willing to accept is one that will restore our state’s financial stability and allow us to once again invest in our future,” McKay said.
Speakers from four other groups — Kansas Action for Children, the Kansas Contractors Association, the Kansas Organization for State Employees and the Kansas National Education Association — joined in the call for Option 4.
Shannon Cotsoradis, president and CEO of Kansas Action for Children, decried the tobacco-money deal, which would yield a one-time infusion of $158 million. The money pays for early childhood programs.
The Brownback administration said most of the funds would be retained for the programs, but Cotsoradis said the deal is risky and puts the programs’ funding in danger.
“None of the options work for Kansas families,” she said.
Bob Totten, executive vice president of the Kansas Contractors Association, criticized Brownback’s plan to take $185 million from the state highway fund. That plan led the Transportation Department to announce the delay of 25 projects slated to begin over the next two to three years.
“I believe these projects will never be completed,” Totten said, citing the lack of a designated revenue stream.
Mark Desetti, legislative director of the Kansas National Education Association, said that K-12 schools were promised stable funding when the Legislature approved a two-year, block-grant school funding program last year. The across-the-board cuts would reduce K-12 school spending by about $57 million.
“Now we are on the edge of another broken promise to our children and teachers,” Desetti said. “It’s time to return to a stable, dependable, fair tax system.”