Kansas revenue growth lags

Writing from Shreveport, Louisiana

As Karl writes, things are getting better in Kansas, but not at anywhere near the rate the economy is growing nationwide. But that doesn’t seem to bother our governor.


Kansas Revenue Growth Lags
By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

Governor Sebelius continues to spread the message that the Kansas economy is growing again. State tax collections are rising. The expansion in tax revenue has allowed the big spending members of the Kansas legislature and the Kansas Supreme Court to go on a spending spree without anyone having to vote to raise state taxes in 2006.

State Senator Jim Barnett, the Republican gubernatorial candidate opposing Sebelius, is citing federal job data showing that private job growth in Kansas is 50th among all the states while government job growth is the only area where Kansas employment is rising. At the same time the state’s unemployment rate continues to exceed the national average. Barnett has a proposal to get the state’s economy moving with a series of tax cuts to stimulate economic growth.

Outside of Kansas and outside the boundaries of a Kansas election campaign, the federal tax collections from all 50 states are also reporting sizable growth. President Bush does not seem to be getting any credit for the growth in the national economy but there is strong growth in federal tax collections. The two rounds of federal tax cuts have dramatically changed federal tax policy nationally during his six years in office. The most recent Bush tax cut has now had a couple of years to take effect.

Despite soaring levels of bipartisan federal spending growth the federal tax collections have managed to expand faster than congressional pork masters can grow it. Federal tax collections for the fiscal year that ended September 30 are 29.7 percent higher than two years ago. The federal budget deficit for last year was $260 billion, well below the $423 billion deficit projected by federal budget estimates last February.

In August, 2005 Governor Sebelius’s office put out a news release touting the fact that state tax collections had grown over 7 percent for the fiscal year ending June 30. To compare the percentage growth of federal and Kansas tax revenues, one must adjust one of these fiscal years. Total state tax collections grew from $4.423 billion in 2004 to just over a billion dollars more, $5.440 billion as of September 30 putting receipts on a October 1 fiscal year. That is 19.7 percent growth.

Nationally, at the same time federal tax revenues are growing over 50 percent faster and are approaching $2.4 trillion annually. Kansas tax revenue growth is significant but we are lagging way behind the national growth level percentage. Another point that would confirm this data is a new Tax Foundation study that surveyed business taxation covering all 50 states October 10, 2006. Kansas scored a mediocre 31st on this Tax Foundation score card (see www.taxfoundation.org) and was almost unchanged from the 2004 measurement looking at data from the beginning of Governor Sebelius’s first term.

Meanwhile, in her campaign commercials Governor Sebelius touts a two year old Pacific Research Institute and last year’s Beacon Hill surveys claiming that Kansas has one of the best business and economic climates at 13th in the country. The Beacon Hill study examined a wide variety of criteria. The specific data included a student achievement measurement. Kansas students scored well using data from before the Montoy case spending began. In addition, Kansas scored highly in the number of engineering and science students graduating. Sadly, Kansas scored much lower in the number of engineering and science degree holders who were able to find jobs in Kansas after graduating.

Kansas also scored well on Beacon Hill’s ranking for commuting times and rental cost for apartments but scored badly in venture capital, new company formation, and near the bottom of all 50 states when measuring government employment. Kansas also scored well in having a low percentage of citizens without health insurance and percentage of the population seeking post high school degrees too.

Kansas’s economy is growing as reflected in the expansion in tax revenues but we are lagging behind the rest of the country when compared with federal tax growth from all 50 states. This is grist for both of the major party gubernatorial campaigns but this data actually helps the challenger, Senator Barnett, much more in his uphill race against Governor Sebelius.


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