Printable tables of voting on legislation that raised taxes in Kansas.
The legislation that implemented tax increases in Kansas in 2017 is SB 30, titled “Concerning taxation; income tax, determination of Kansas adjusted gross income, modifications, rates, itemized deductions and credits; sales and compensating use tax, collection and distribution thereof, STAR bonds.” 1
Important action on this bill took place on June 5 and 6. On the first day, each legislative chamber passed a conference committee report. That’s a version of the bill that’s produced by a committee of three members of each chamber. It resolves differences between the bills passed by each chamber. The report is then sent to each chamber for a vote where no amendments are allowed. This report passed both chambers and was sent to the governor.
The governor vetoed the bill, so each chamber then had a chance to override the governor’s veto with a vote of two-thirds of its members. The override was successful, and SB 30 became law.
For the first vote in the House, which passed with a fairly narrow margin of six votes over what is required, a number of Democrats voted Nay, presumably because they thought the tax increase was not large enough. On the vote to override, all Democrats except one voted in favor of higher taxes, and quite a few Republicans switched their votes from opposition to higher taxes to voting in favor of higher taxes.
In the Senate the vote was more consistent. The first vote passed with 26 votes. The second vote, which required 27 votes to be successful, achieved exactly that number, as one Republican senator switched to vote in favor of higher taxes.
In the downloadable and printable pdf tables, notable votes are indicated. For vote 2, the override vote which passed the bill into law, Republican votes are indicated. Additionally, those members who changed their support of higher taxes from vote 1 to vote 2 are indicated. For House of Representatives votes, click here. For Senate votes, click here.
Of note, the two votes mentioned above are not the only votes on SB 30. The bill started its legislative journey as a bill titled “An act concerning sales taxation; relating to the Kansas retailers’ sales tax act.” Later all language in the bill was deleted and an entirely new bill was created, although it retained the designation SB 30. Votes taken before that time are not relevant to the final purpose of the bill.
Even though the Kansas Legislature raised taxes, sweeps from the highway fund will continue.
Why did the legislature and governor raise taxes in Kansas? One reason cited by many is the need to stop “robbing the highway fund.” This refers to transferring (“sweeping”) money from a fund in the Kansas Department of Transportation to the state’s general fund, where the money is then spent on things besides highways. There was bipartisan agreement that this practice should stop. Highways were falling apart, it was said, even though spending on major road maintenance programs continued at about the same level. 1
The real danger in transferring money from the highway fund is that KDOT borrows money — a lot of money. And instead of that money being spent on long-lived assets like roads and bridges, that borrowed money is spent on current consumption.
But: Guess what? Transfers from the highway fund to the general fund are scheduled to continue for another two years, based on the budget passed by wide margins in both chambers of the legislature. 2
Language in the budget calls for quarterly sweeps totaling $288,297,663 in fiscal year 2018, with the first sweep on July 1, 2017. 3
For fiscal year 2018, the total of the quarterly sweeps is $293,126,335. 4
There are several ways to look at these transfers. We might look at it as reclaiming from the highway fund some of the sales tax the state collects. That amount has grown. In 2006 the transfer of sales tax revenue to the highway fund was $98,914 million. In 2016 it was $517,698 million, an increase of $418,784 million or 423 percent. 5
But if the legislature wanted to alter the transfer of sales tax, it could have done so by altering the law that specifies the rate of transfer. That promotes transparency.
The budget authorizes the transportation department to borrow up to $400 million in each of the next two fiscal years. There will be pressure to issue those bonds.
Sec. 163 (i). On July 1, 2017, October 1, 2017, January 1, 2018, and April 1, 2018, or as soon thereafter each such date as moneys are available, the director of accounts and reports shall transfer $72,074,415.75 from the state highway fund (276-00-4100-4100) of the department of transportation to the state general fund: Provided, That the transfer of each such amount shall be in addition to any other transfer from the state highway fund of the department of transportation to the state general fund as prescribed by law: Provided further, That, in addition to other purposes for which transfers and expenditures may be made from the state highway fund during fiscal year 2018 and notwithstanding the provisions of K.S.A. 68-416, and amendments thereto, or any other statute, transfers may be made from the state highway fund to the state general fund under this subsection during fiscal year 2018. ↩
Sec. 164 (i). On July 1, 2018, October 1, 2018, January 1, 2019, and April 1, 2019, or as soon thereafter each such date as moneys are available, the director of accounts and reports shall transfer $73,281,583.75 from the state highway fund (276-00-4100-4100) of the department of transportation to the state general fund: Provided, That the transfer of each such amount shall be in addition to any other transfer from the state highway fund of the department of transportation to the state general fund as prescribed by law: Provided further, That, in addition to other purposes for which transfers and expenditures may be made from the state highway fund during fiscal year 2019 and notwithstanding the provisions of K.S.A. 68-416, and amendments thereto, or any other statute, transfers may be made from the state highway fund to the state general fund under this subsection during fiscal year 2019. ↩
Kansas Governor Sam Brownback may exercise a line item veto over any item in the just-passed budget and school spending bills. Here are a few ideas that deserve the veto.
A small matter: In his recommended budget, Kansas Governor Sam Brownback recommended moving the Kansas Securities Commissioner to the Insurance Department. That happened. But his recommendation to move the Board of barbering to the Board of Cosmetology was not followed. As a result, $186,384 must be added to spending for FY 2018. This is all funds spending, not general funds. There is a deletion of spending from the Board of Cosmetology that partially offsets this spending, but it is a lost opportunity to save. 12
A large matter: The efficiency study commissioned by the legislature recommended savings in the method of acquiring health insurance for public school employees. This was not adopted. Therefore, $47,200,000 in general fund spending is added over what the governor recommended. 34
This is the type of spending that needs to be vetoed. Except: There is no line in a bill that designates this spending. Instead, this “spending” in the form of savings not realized. The governor should veto SB 19, the school funding bill, in part or in whole. Such a veto, along with a likely override, would send a message to Kansas taxpayers that the legislature chose to spend this money instead of pursuing needed efficiency.
“For FY 2018 and FY 2019, the Governor recommends certain consolidations that include moving the Securities Commissioner to the Insurance Department and moving the Board of Barbering to the Board of Cosmetology. The Governor estimates that combining the agencies will create efficiencies and save money over the long-term.” The Governor’s Budget Report for Fiscal 2018, Vol. 1. p. 77 ↩
Conference Committee Report for HB 2002, Sec. 12 (a) ↩
“The FY 2018 budget assumes savings of $47.2 million from implementation of Alvarez & Marsal efficiency recommendations to include K-12 health benefit consolidation and sourcing select benefit categories on a statewide basis.” Budget Report, p. 17 ↩
“Add $47.2 million, all from the State General Fund, for removing savings associated with A&M recommendations for health insurance and procurement for FY 2018.” Bill Explanation For 2017 Senate Sub. For House Bill 2002, p. 10. ↩
A politician’s boasting should not be the yardstick for policy.
As noted by Ed Flentje in the Wichita Eagle:
As a newly elected governor in 2011 Brownback embraced the discredited, tax-cut dogma of Arthur Laffer in the belief that tax cuts would dramatically stimulate economic growth. He told a friendly audience that cutting income tax rates would generate even more revenue for government. Soon after, the governor elevated the bluster. His tax cuts would give “a shot of adrenaline in the heart of the Kansas economy.” “We’ll have a real live experiment.” “Look out Texas. Here comes Kansas!” “Glide path to zero.”
Despite Professor Flentje’s claim, there is much evidence that higher taxes, especially higher income taxes, mean lower economic growth. 123 (There’s also the side benefit of leaving more money in the hands of those who earned it, rather than transferring it to the wasteful public sector.) Cutting taxes — or raising taxes, for that matter — is a treatment that influences things in one direction. If other more powerful forces influence things in an opposite direction, it doesn’t mean the original treatment didn’t work.
In the case of Kansas, think how much worse things might be if not for the stimulative effect of the tax cuts.
Still, Governor Brownback should have been more measured in his remarks — or his bluster. He shouldn’t have followed the example of President Barack Obama. He, right after becoming president, promised that the unemployment rate would not top eight percent if his stimulus bill was passed. That plan passed.
In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus. The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.
The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises, boasts, and bluster made by politicians. Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.
Governor Brownback was right to cut taxes because Kansas taxes were too high.
“So what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.” McBride, William. What Is the Evidence on Taxes and Growth? Tax Foundation. Available at https://taxfoundation.org/what-evidence-taxes-and-growth/. ↩
“Research finds that higher state taxes are generally associated with lower economic performance. There is somewhat weaker evidence that state and local taxes can significantly reduce income growth within a state, particularly when the revenues raised are devoted to transfer payments. More recent research corroborates this finding in relation to net investment and employment. However, when additional tax revenue is used to improve the quality of public goods and services, economic growth may increase. When looking at business activity more broadly, more comprehensive reviews of the literature find higher taxes to be associated with less economic growth. They also find this relationship to be stronger within metropolitan areas than across metropolitan areas, which means that local taxes have a larger effect on economic growth when it is less costly for firms and taxpayers to relocate to avoid the tax.” Mercatus Center. Economic Perspectives: State and Local Tax Policy. Available at https://www.mercatus.org/publication/economic-perspectives-state-and-local-tax-policy. ↩
A video explaining the Kansas budget is accurate in many aspects, but portrays a false and harmful myth regarding school spending.
A popular video explaining the Kansas budget deserves scrutiny for some of the data presented. The video is available at the Facebook page of Loud Light.
The presentation makes a few good points. For example, the video is correct in that the sales tax is a regressive tax, affecting low-income households in greater proportion. During the capaign for a Wichita city sales tax in 2014 I analyzed Census Bureau data and found that the lowest income class of families experience an increase nearly four times the magnitude as do the highest income families, as a percentage of after-tax income.12
The video also rightly notes that Kansas is now, and it has in the past under other legislatures and governors, inadequately funding KPERS, the state employee pension plan.
Interestingly, the video praises Kansas for its early adoption of “progressive economics.” I think the narrator meant “progressive taxation,” as the video shows Kansas adopting an income tax in 1933. How has that worked for Kansas? There are a variety of ways to look at the progress of Kansas compared to the nation, but here’s a startling fact: For the 73rd Congress (1933 to 1935) Kansas had seven members in the U.S. House of Representatives. (It had eight in the previous session.) Today Kansas has four members, and may be on the verge of losing one after the next census. This is an indication of the growth of Kansas in comparison to the nation.
The narrator states, “Kansas Department of Transportation is mostly funded by restricted revenue like fuel tax.” This was true at one time. But starting in 2011 KDOT has received more funding from sales tax than motor fuel tax.3 The gap is getting wider, as can be seen in the nearby chart. (By the way, there are proposals to increase the motor fuel tax. This tax is just like the sales tax, affecting low-income households greatest.)
The greatest problem in this video is its explanation of state spending on K through 12 schools. This is important, as the video correctly notes that this spending is half of the general fund budget. In introducing this section, the narrator notes “budget report gamesmanship that’s created a rhetorical paradox,” conceding it is “technically” true that education spending is at record levels.
The video then shows a chart titled “State Aid Per Pupil.” The chart starts with a value a little over $6,000 in 1993, declining to about $4,000 in 2013, then staying at that level. The citation is “Governor’s Budget Report” from the Kansas Division of Budget, and at the end of the video there is the explanation, “All financial data in this video is inflation adjusted to January 2017.”
A more accurate title for the chart is “Base State Aid Per Pupil.” That’s the actual name for the component of school spending that the video displays. This is important because base state aid is only the starting point for determining spending. Actual state aid to schools is much higher.
Base state aid per pupil — the statistic the video presents — is an important number.4 It’s the starting point for the Kansas school finance formula used before the 2015-2016 (fiscal 2016) school year, and something like it may be used in a new formula. 5
Base state aid, however, is not the only important number. To calculate the funding a school district receives, weightings are added. If students fall into certain categories, weightings for that category are added to determine a weighted enrollment. That is multiplied by base state aid to determine total state aid to the district. 6
While this may seem like a technical discussion that doesn’t make a difference, it’s very important. Some of the weightings are large and have increased by large amounts. The at-risk weighting, intended to cover the additional costs of teaching students from low-income families, started at five percent in 1993. In other words, for every student in this category, a school district received an extra five percent of base state aid. The value of this weighting has risen by a factor of nine, reaching 45.6 percent starting with the 2008-2009 school year.7
So in the nearby chart that I prepared using data adjusted for inflation in 2016, we see base state aid per pupil on a downward trend, just as the video shows. But I also plotted total state aid per pupil, which includes weightings. This number is on a mostly upward trend.
The weightings have a large effect on school funding. For example: During the 2004-2005 school year, base state aid was $3,863 and the at-risk weighting was ten percent. An at-risk student, therefore, generated $4,249 in state funding. (Other weightings might also apply.)
Ten years later base state aid was $3,852 — almost exactly the same — and the at-risk weighting was up to 45.6 percent. This generates funding of $5,609. For a district that qualified for the maximum high-density at-risk weighting, an additional $404 in funding was generated. (These numbers are not adjusted for inflation.)
So even though base state aid remained (almost) unchanged, funding targeted at certain students rose, and by a large amount.
Over time, values for the various weightings grew until by 2014 they added 85 percent to base state aid. A nearby chart shows the growth of total state aid as compared to base state aid. (Starting in fiscal 2015 the state changed the way local tax dollars are counted. That accounts for the large rise for the last year of data in the chart. For school years 2016 and 2017, block grants have replaced the funding formula, so base aid and weightings do not apply in the same way.)
All this determines state aid to schools only. There is also local aid and federal aid.
The questions Kansans should ask are these: Why doesn’t this video explain that “base state aid per pupil” is not the same as “state aid per pupil?” And why not explain that total state aid per pupil is much higher than base state aid, and has been rising over the long term?
There’s also the high-density at-risk weighting. Starting with the 2006-2007 school year districts with a high concentration of at-risk students could receive an extra weighting of four percent or eight percent. Two years later the weightings were raised to six percent and ten percent. (This formula was revised again in 2012 in a way that may have slightly increased the weightings.) ↩
But before we accept these results, we need to know that ACS CAN will not release the full results of the survey, as other organizations have done.
In particular, last year Kansas Hospital Association conducted a poll on the topic of Medicaid expansion, and it released the complete poll and results.1
This year Kansas Center for Economic Growth conducted a poll. It released the full results.2 From this release, we learned that one of the questions was so vague as to be open to many different interpretations.3
ACS CAN produced a short press release.5 Upon request, I received the text of one question and a chart of results.6
But ACS CAN, despite multiple requests to several contacts, will not release the full results of the poll, as other public policy advocacy groups have done.
It would be unfair to conclude that ACS CAN has something to hide, or that the poll was constructed in a way to be misleading. Conversely, it is not wise to give much weight to this poll when we know so little about it.
“Uninsured Kansans earning less than sixteen thousand dollars a year do not have access to any affordable healthcare coverage options. Kansas lawmakers are considering taking action that would provide these low?income residents access to coverage that would include primary care, preventive screenings, diagnostic testing, and cancer treatment services through the state’s KanCare program. The federal government would cover most of the cost to cover these state residents. Do you favor or oppose Kansas accepting the federal funds to increase access to healthcare coverage for thousands of hardworking Kansans through the state’s KanCare program?” Results at https://wichitaliberty.org/wp-content/uploads/2017/05/ACS-Kansas-Medicaid-poll-2017-exp-poll.pdf. ↩
The budget deadlock has begun at the Kansas statehouse. The legislature cannot leave Topeka until they have approved the next biennial state budget that will begin July 1. Usually, this includes the governor’s signature on that legislation. That might not happen this year. That’s the issue.
Governor Brownback is not willing to fund a multi-year, multi-billion spending bill demanded by the liberal legislative majorities in both houses. Earlier this year he vetoed a record-breaking income tax hike scheme. So far, the governor has been successful in having his vetoes sustained.
The pressure is going to be applied for the governor’s fiscally responsible Republican allies opposed to income tax hikes.
The powerful government employee spending lobbies, headed by arguably, the most powerful lobby in this state, the KNEA teachers’ union, that spending priorities for the reliably liberal Democrats in the legislature along with a large number of other self-described, “progressives,” or “moderates,” big spending Republicans now hold sizable majorities in both houses of the Kansas legislature. However, the bi-partisan spending factions are short of the two-thirds majorities required to override Governor Brownback’s repeated vetoes. The spending lobbies have come close, and did override the governor’s pass a record-breaking income tax hike proposal in the Kansas house, but that override effort ultimately failed by three votes in the senate.
The other powerful spending lobbies among the road contractors, hospitals, and the most powerful appointed body: ethically flawed and disciplined Chief Justice of the Kansas Supreme Court, Lawton Nuss, and his fellow band of black-robed lawyers on the Kansas Supreme Court continue to try and force massive state spending hikes. Several members of this court, including Nuss, represented school districts and school finance litigation issues before joining the court.
Massive tax hikes will be required to fund this spending spree. Spending estimates indicate the increases proposed would be $2.25 billion over five years according to State Representative John Whitmer. Expanding Obamacare under the guise of Medicaid expansion could be even more expensive after the first few years.
What is different with earlier Kansas budget battles besides another zero on the cost? In this digital age we are in, everything seems to have moved digitally into a win/lose, up/down, on/off configuration.
The lawyers on Kansas’ top court with their school funding edicts, will all be providing pressure and using the leftstream Kansas news media to try and push a handful of Republican legislators to shift their votes, so everyone can go home with a huge income tax hike. Sadly, this destructive tax hike is unlikely to be successful in funding all of the proposed state spending proposals.
This is the big spenders’ dream scenario for the next state budget.
The scenario for fiscally responsible legislators and Governor Brownback is less clear. In the analog days of the 20th century, when people looked for win-win, instead of zero-sum games where every winner means there must be a loser, compromise was the answer.
To his credit, Governor Brownback has expressed a willingness to compromise. Brownback has supported and signed smaller excise tax hike bills in recent years. He continues to be blasted by liberal media critics in the editorial pages across the state. These tax hikes tried to reach a legislative compromise that allowed a continued growth in state spending. This spending growth was being driven by the perpetual school finance lawsuits.
There is another solution if the legislative deadlock continues, and there is a recent and nearby example for Kansas elected officials to consider: let the people decide. The Kansas Constitution has a provision that, “…all political power in this state is inherent in the people.” This is in the Kansas Constitution’s Bill of Rights.
How would empowering Kansans work?
In 2016, in our neighboring state to the south, Oklahoma, the state spending lobbies convinced the legislature to place a one cent sales tax hike on the statewide ballot. In November 2016 Oklahoma voters decided the fate of this sales tax hike. It was rejected by the voters.
A compromise between Governor Brownback and his fiscally conservative GOP legislative allies on one side could be reached with the larger number of Democrat and Republican tax hike advocates in the legislature using this “let the people decide,“ approach. Kansas taxpayers need to have a say in the massive new spending schemes appearing at the statehouse.
The tax hike advocates can place their proposal for raising state taxes/spending on either the August or preferably the November 2017 election ballot where a statewide referendum could be held. Both sides could make their case to voters. All political power is inherent in the people, and letting the voters decide would certainly be preferable to having appointed lawyers in black robes setting state fiscal policy with big-spending legislators as their willing accomplices.
Karl Peterjohn is a former journalist and served two terms as a Sedgwick County commissioner between 2009-17. He advocated on behalf of Kansas taxpayers as the executive director of the Kansas Taxpayers Network between 1992-2009.
By Paul Waggoner. This column first appeared in the Hutchinson News.
Listening too often to Topeka politicians and administrators can leave a normal person feeling rather jaded, even used. Or maybe it’s the reporting, sometimes I just don’t know.
Such was the case Tuesday reading the News report of Kansas Dept of Education Deputy commissioner Dale Dennis speech to the local Rotary club (Hutchinson News, April 18, “Ed Official: Fund Gap numbers shocking”). His talk was filled with boilerplate and themes typical of the education establishment.
Mr. Dennis made multiple comparisons and statements of fact to prove his points. In the article by the News own Mary Clarkin, Mr. Dennis set up a paradigm of school under-funding by noting that “in 1992 base state aid per pupil was $3,600”, while now it is only $ 3,852. If the amount had just been adjusted for inflation “it would be $6001.12”. Those cheapskate legislators!
These disheartening numbers for funding over the last 25 years, Mr. Dennis told the crowd, “are shocking, shocking”. Then he went on to tout House Bill 2410 that would raise base state aid to $4,006 next year and $4,800 per pupil by 2021. The total cost of this bill would come to $750 million. Which, Ms. Clarkin summarizes, would get us “back to where the state should have been in 2015-16”’.
I am not an educator, but I am a business person and I am conversant with state budget and spending numbers. Mr. Dennis, I hope to show, should be embarrassed by his comments; but even more, the News should be embarrassed by their article.
The data on Kansas K-12 spending is easily accessible at the Kansas Dept of Education website ksde.org. Going back 20 years to Gov. Graves and 1997 you see total state funding of $1,815 million, rising to $3,950 million in 2016, a 117 percent increase! But the inflation rate during this period was only 47 percent, and the student count was up just three percent. Surprised?
Total spending (state/federal/local) is the best indicator of overall education financing. Plus you avoid disputes over how KPERS should be counted (whether state or local) and you get a genuine bottom dollar cost.
Many News readers need to let these numbers sink in. This is not spin, this is official data, Total spending went from $6,828 to $12,188 per pupil in barely 10 years.
Now Mr. Dennis was giving you a “fact” on base state aid, but he avoided telling our esteemed Rotarians that in the 1990s “base state aid” was 90 percent of the money Kansas provided our schools, but by 2005 it was only 65 percent of Kansas school funding, and in 2015 it was barely 50 percent. The ksde.org website listed over 25 different avenues state money now flows to local schools.
Ms. Clarkin of the News is an intelligent women and if some Department of Commerce representative came touting “shocking” job growth numbers in Kansas she surely would have noted evidence or context to the contrary. But Mr. Dennis utter factual inaccuracies go unchallenged.
Many seem to think it is “anti-education” to point out the real spending numbers. But to ignore the context of the 12 years prior to Brownback and the 80% increase in state K-12 spending is insane. Does any genuine public servant think that spending trajectory was sustainable?
The actual K-12 spending information is just a few clicks away from us for any school district or the state as a whole. The Rotarians of 2017 are a sensible group and will (I trust) rotate their minds with the actual data and judge accordingly.
But I, for one, am forever shocked (shocked!) by how disingenuous Topeka bureaucrats and our Kansas news media continue to be. And in that I expect I will have plenty of company as this legislative year moves forward.
Paul Waggoner is a Hutchinson resident and business owner. He can be reached with comments at [email protected]
In Rich States, Poor States, Kansas improves its middle-of-the-pack performance, but continues with a mediocre forward-looking forecast.
In the 2017 edition of Rich States, Poor States, Utah continues its streak at the top of Economic Outlook Ranking, meaning that the state is poised for growth and prosperity. Kansas continues with middle-of-the-pack performance rankings, and after falling sharply in the forward-looking forecast, continues at the same level.
Rich States, Poor States is produced by American Legislative Exchange Council. The authors are economist Dr. Arthur B. Laffer, Stephen Moore, who is Distinguished Visiting Fellow, Project for Economic Growth at The Heritage Foundation, and Jonathan Williams, who is vice president for the Center for State Fiscal Reform at ALEC.
In addition to the printed and pdf versions of Rich States, Poor States there is now an interactive web site at www.richstatespoorstates.org.
Rich States, Poor States computes two measures for each state. The first is the Economic Performance Ranking, described as “a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment — all of which are highly influenced by state policy.” The process looks at the past ten years.
Looking forward, there is the Economic Outlook Ranking, “a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs, and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”
For economic performance (the backward-looking measure), Kansas ranks twentieth. That’s up from twenty-seventh last year.
In this year’s compilation for economic outlook, Kansas ranks twenty-sixth, up one position from the previous year, but down from eighteenth and fifteenth the years before. In 2008, the first year for this measure, Kansas was twenty-ninth.
Kansas compared to other states
A nearby chart shows the Economic Outlook Ranking for Kansas and some nearby states, shown as a trend over time since 2008. The peak of Kansas in 2013 is evident, as is the decline since then.
Why Kansas fell
Kansas fell in the Economic Outlook Ranking from 2013 to 2016 and moved by just one position in 2017. To investigate why, I gathered data for Kansas from 2008 to 2017. The nearby table shows the results for 2017 and the rank among the states, with the trend since 2008 shown. A rank of one is the best ranking. For the trend lines, an upward slope means a decline in ranking, meaning the state is performing worse.
There are several areas that account for the difference.
The most notable change is in the measure “Recently Legislated Tax Changes (per $1,000 of personal income)” Kansas fell four positions in rank. By this measure, Kansas added $2.66 in taxes per $1,000 of personal income, which ranked forty-sixth among the states. This is a large change in a negative direction, as Kansas had ranked seventh two years before.
For the state liability system, Kansas ranks nineteenth, when it was fifth two years ago.
Kansas remains one of the states with the most public employees, with 669.8 full-time equivalent employees per 10,000 population. This ranks forty-eighth among the states.
Kansas has no tax and spending limits, which is a disadvantage compared to other states. These limitations could be in the form of an expenditure limit, laws requiring voter approval of tax increases, or supermajority requirements in the legislature to pass tax increases.
How valuable is the ranking?
After the 2012 rankings were computed, ALEC looked retrospectively at rankings compared to actual performance. The nearby chart shows the correlation of ALEC-Laffer state policy ranks and state economic performance. In its discussion, ALEC concluded:
There is a distinctly positive relationship between the Rich States, Poor States’ economic outlook rankings and current and subsequent state economic health.
The formal correlation is not perfect (i.e., it is not equal to 100 percent) because there are other factors that affect a state’s economic prospects. All economists would concede this obvious point. However, the ALEC-Laffer rankings alone have a 25 to 40 percent correlation with state performance rankings. This is a very high percentage for a single variable considering the multiplicity of idiosyncratic factors that affect growth in each state — resource endowments, access to transportation, ports and other marketplaces, etc.
In Kansas, a governor is proud of savings and efficiencies.
Can you guess which Kansas governor and administration did these things?
Looked for future highway projects “where it seemed the amount of money set aside exceeded the need, or where the scope of individual projects had changed,” and took credit for $278 million in savings.
Took credit for saving $67 million by adjusting the inflation rates used in estimating future project costs.
Took credit for $306 million in savings by spending reserve funds, deciding that money wasn’t needed just “sitting in the bank.”
Refinanced bonds so that payments would be lower for a few years, but higher afterwards.
Here’s a table of the three votes taken in the Kansas House of Representatives in February and April on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.
Vote 3 on April 3 was to override the governor’s veto. 84 votes are required for a successful override.
A public opinion poll asks whether Kansans are concerned about school spending, but leaves us wondering why they are concerned.
A public opinion poll commissioned by Kansas Center for Economic Growth asks questions so vague that the results could be interpreted in many ways.
The March 30, 2017 press release on the poll announced: “Nearly all Kansas voters are worried the state is not investing enough public education. Eighty-five percent of Kansas voters feel concerned about the state’s level of spending on public education.”1
“Q.5 Would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”
(The reported results are: Very concerned 63%, Somewhat concerned 20%, A little concerned 5%, Not at all concerned 8%, (Don’t know/refused) 3%)
Let me ask you: Are you concerned about the level of spending on public education? I am. And there might be many reasons why Kansans are concerned.
Some people think the state spends too much
Some people think the state spends too little
Many people know that school spending is a large portion of the state’s budget, so naturally they are concerned, no matter if their opinion is that spending is too high or too low
Some people are concerned that state spending is misdirected and inefficient
There could be other reasons why people are concerned about the level of state spending on education. But this question does not give any guidance as to why people are concerned.
Later in the survey another question was asked: “Q.12 As you may know, the Kansas Supreme Court recently ruled, unanimously, that the state’s spending on public education was unconstitutionally low and needed to be fixed by June 30th. With this in mind, would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”
Still, the question did not ask whether people are concerned because spending is too high or too low. As a result, the answers to the survey questions can be used to advance nearly any agenda.
There has been another vote on this bill, and the table has been updated. Click here.
Here’s a table of the two votes taken in the Kansas House of Representatives in February on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.
Here’s a table of the two votes taken in the Kansas Senate this week on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.
A public interest group makes claims about Kansas roads and highways that are not supported by data. It’s not even close.
A fundraising email sent by Save Kansas Coalition makes claims about Kansas roads and highways that readers will recognize as a few of the standard complaints common among Kansas spending and taxation advocates. It’s charitable, though, to call them complaints, because they are actually outright lies.
“Budget cuts and sweeps from the Bank of KDOT have decimated our state’s transportation infrastructure investments.” Decimate means “to reduce drastically” or “to cause great destruction or harm to.”1
Reading that, you might think that spending has been cut by — how much? 10 percent? That doesn’t sound like decimating. 50 percent? 75 percent? That’s more like what decimating means.
So what is the story on Kansas Department of Transportation spending? Nearby is a chart. It shows amounts of money actually spent on road and highway programs, according to KDOT’s annual financial reports. SKC is correct, partially. There have been sweeps from KDOT to the general fund. Those are not a good idea, even though they’ve been practiced for many years. But as shown nearby and in more detail at Spending on roads in Kansas spending has not declined. It been up and down a little, but is higher than it was in 2007 and 2008, before the recession.
In particular, spending on maintenance has been fairly level until dipping a bit in 2016. Spending on preservation rose rapidly until dipping, also in 2016. It’s still twice as high as in the pre-recession years of 2007 and 2008.
Does this sound like spending has been decimated?
By the way, there are sweeps from sales tax to the highway fund. Nearby is another chart showing how much sales tax was transferred to the highway fund. In 2006 the transfer was $98,914 million. In 2016 it was $517,698 million, an increase of $418,784 million or 423 percent.
SKC also writes: “Whereas we formerly maintained 1200 miles of roadway each year, the state now can only afford 200 miles of upkeep. That means road repair once every 50 years!”
Each year KDOT publishes a list of the road projects underway. I’ve obtained this data in machine-readable form for five years, and I present the relevant data in a nearby table.
(A few definitions: According to KDOT, “The Preservation program protects the public’s investment in its highway system by maintaining the ‘as built’ condition of roads and bridges. Projects in this group range from roadway surfacing rehabilitation and bridge repairs to pavement and bridge replacement.”2 For Modernization, KDOT says “Projects under this program are designed to enhance safety and/or improve roadways by adding shoulders, flattening hills, straightening curves and upgrading intersections on already existing roadways.”3)
While SKC isn’t specific in what it means by “maintained” or “upkeep,” it’s possible it is referring to the category “Non-Interstate Resurfacing (PMS 1R).” As you can see in the table, the number of miles in the program has risen for the past three years, and is far above the 200 miles SKC claims we can afford.
The claims made by Save Kansas Coalition don’t add up. Ironically, SKC’s website promises “A willingness to engage in meaningful discussion, in-depth research and critical analysis is vital to the health of the Kansas economy.” But nothing in the record of relevant data supports these claims — unless SKC has secret data it isn’t willing to share.
Kansas revenue estimates are frequently in the news and have become a political issue. Here’s a look at them over the past decades.
A favorite criticism of liberals and progressives across the nation is that in Kansas, actual revenues to the state’s general fund have fallen short of projections, month after month. Reading most newspaper reports and editorials, one might think that these negative variances are a new phenomenon, and one relished by the Left. As many as a dozen articles on this topic have appeared in the New York Times in the past two years.
The revenue estimates in Kansas are produced by a body known as the Consensus Revenue Estimating Group. It consists of one member each from the Division of the Budget, Department of Revenue, Legislative Research Department, and one consulting economist each from the University of Kansas, Kansas State University, and Wichita State University.
As described: “This group meets each spring and fall. Before December 4th, the group makes its initial estimate for the budget year and revises the estimate for the current year. By April 20th, the fall estimate is reviewed, along with any additional data. A revised estimate is published, which the Legislature may use in adjusting expenditures, if necessary.”1
The estimates are important because the legislature and governor are required to use them when formulating budgets and spending plans. If the estimates are high, meaning that revenue is less than expected, it’s possible that the legislature or (more likely) the governor will need to make spending cuts. (The other alternative is that leftover funds from prior years may be used, if available.)
If, on the other hand, the estimates are too low, meaning that revenue is higher than expected, the state has collected too much tax revenue. In this case, the state should refund the excess to taxpayers. Some states do that, notably Colorado, although residents may vote to let the state keep the excess.
Some states have true rainy day funds, and the excess revenue might be used to build that fund’s balance. In a true rainy day fund, the fund’s balances can be spent only during specific sets of circumstances.
But in Kansas, the excess revenue is simply called the “ending balance” and is available to spend at the legislature’s whim. That’s what happened in fiscal years 2014 and 2015, when the state spent $340 million and $308 million, respectively, of the ending balance rather than cut spending.
What has been the history of the revenue estimates compared to actual revenue? First, know that making these estimates is not easy. Some of the inputs to the process include the inflation rate in future years, interest rates in future years, and the prices of oil and natural gas in the future. If someone knew these values with any certainty, they could earn huge profits by trading in futures markets.
The state makes the revenue estimates available.2 I’ve presented the results since 1975 in a chart at the end of this article. For each year, two numbers are presented. One it the difference from the Original Estimate and actual revenue. The other is the difference from the Adjusted Final Estimate and actual revenue.
We can see that in fiscal years 2014 and 2016, the variance of the estimates is negative, meaning that revenue was lower than the estimates. The magnitude of these variances, however, is not out of line with the magnitude of the variances of other years, either positive or negative.
In fact, the negative variances — revenue shortfalls, in other words — in the periods 2002 to 2003 and 2009 to 2010 were generally much larger in magnitude than those of recent years. This is of interest as Duane Goossen, who was the budget director during these periods, is a prominent critic of the recent revenue shortfalls. Evidently, he has forgotten the difficulty of creating these estimates.
While Goossen along with newspaper reporters and editorialists use the negative revenue estimate variances as a political weapon against the governor and conservatives, it is in the interest of the people of Kansas that revenue estimates be as accurate as possible. In an effort to produce more accurate revenue estimates, Governor Brownback created a commission to study the issue. That group released its report in October.3
John Todd makes an appearance on The Voice of Reason with Andy Hooser to talk about proposed legislation in Kansas that would be harmful to private property rights. View below, or click here to view on YouTube. Recorded on March 16, 2017.
For more information on this important issue, see In Kansas, the war on blight continues: Kansas governments are trying — again — to expand their powers to take property to the detriment of one of the fundamental rights of citizens: private property rights.
Kansas tax receipts by category, presented in an interactive visualization.
The Kansas Division of the Budget publishes monthly statistics regarding tax collections. I’ve gathered these figures present them in an interactive visualization. In the visualization, there are these available tabs:
Table: A table of data. For each month the two data items supplied by the state are the actual value and the estimated value. This table also holds the computed variance, or difference, between the actual value and the estimated value. A positive number means the actual value was greater than the estimated value.
Collections: Shows monthly collections for each component. Because monthly numbers vary widely, this data is presented as the moving average of the previous 12 months.
Annual Change: Shows the change from the same month of the previous year. A positive value means the value for the month is greater than the same month last year.
Estimates: The Governor’s Consensus Revenue Estimating Working Group provides monthly estimates. This chart shows the variance, or difference, between the actual value and the estimated value. A positive number means the actual value was greater than the estimated value.
Running Total Estimates: This is the cumulative sum of the estimate variances, reset to zero at the start of each fiscal year (July 1).
Running Total Change from Prior Year: This is the cumulative sum of the monthly changes from the prior year, reset to zero at the start of each fiscal year (July 1).
Since July 2014, individual income tax collections have been relatively flat. Corporate income tax collections are on a slight downward trajectory.
Retail sales tax and compensating use tax have been mostly rising. A higher sales tax rate took effect on July 1, 2015, with the rate rising from 6.15 percent to 6.50 percent.
Cigarette taxes rose rapidly since July 2015 when higher tax rates on these products took effect. After peaking, collections are declining.
Severance taxes — tax collected on natural gas and oil as it is extracted from the ground — have been on a downward trend since July 2014 as prices for these products have fallen. This is a sizable tax. In June 2014 collections of this tax were running at about $143 million per year. For February 2017, the rate is $32 million annually.
It may be difficult for us in Kansas to see how the rest of the country views our state. But it’s all about the struggle between those who want more government, and those who want more private sector activity: “… it is clear to most observers of state policy at this point Kansas was, and continues to be, a flashpoint in debates about state tax policy. That flashpoint has served as something of a proxy war between big government advocates and those who would prefer to shrink the size and scope of state government.”
While taxes were cut, the state failed to make the other needed reform: “Spending reductions necessary to implement the plan were eschewed in favor of other tax increases, making any honest judgement of the original plan’s success or failure impossible.”
On the 2012 plan, was it all for business pass-throughs, or for everyone? “Enacted an estimated $4.5 billion in tax relief over five years, about 80 percent of which was for individuals and 20 percent for business pass-through income.”
We have to remember the failure of the legislative process in 2012 and the next year: “It is important to note at this point that the revenue increasing offsets included in the 2013 tax plan were nowhere near as comprehensive as the revenue raising offsets in Governor Brownback’s original 2012 tax reform proposal. It was this discrepancy in revenue raising offsets and the failure to rein in state spending that would ultimately lead to revenue problems for Kansas down the road.”
Credit downgrades are a sign of a mismatch between revenues and expenses. Those who want more spending say the downgrades are caused by a lack of revenue, but we could have cured the mismatch by reforming spending, too: “Contrary to this popularly reported narrative, Moody’s cited much more than just recent tax cuts as the rationale for a downgrade, specifically failure to reduce spending to offset tax cuts, pension liabilities and state debt.
The purpose of tax cuts? Let us keep more resources in the productive private sector: “It is certainly true that in the years following the tax reductions, Kansas did experience lower revenue collections, even lower than what had been projected. But, part of the goal of the Kansas tax reform was to reduce the amount of money taken in by state government and enhance the resources available to the private sector. Importantly, however, was the resistance to any meaningful spending reductions. Even as the 2012 tax reductions were projected to let Kansans keep $4.5 billion more of their own money, the state increased spending in 2012 by $432 million.”
Would more taxes help the Kansas economy? “In a late 2012 literature review on this topic, William McBride, former Chief Economist for the Tax Foundation, found that of 26 peer-reviewed academic studies since 1983, only three fail to find a negative effect on economic growth from taxes.”
The 2015 legislative session: “A block of legislators held out for reductions in the cost of government rather than tax increases but they were unable to get a majority. … The final plan that passed both houses and was signed by Governor Brownback included two main tax increases. The state raised the cigarette tax by 50 cents per pack and increased the sales tax rate from 6.15 percent to 6.5 percent. The two tax increase proposals added up to $384 million in new state revenue and were bolstered by $50 million in spending cuts, although there was still a net increase in spending.”
Our legislature failed the people of Kansas: “The first lesson to glean from the Kansas experience is that politics affects policy. The final reforms that passed in 2012 were not the reforms that anybody wanted. Specific tax reform ideas are easily diluted and changed, and without the political will to fix imperfect reforms, unintended consequences can be difficult to avoid.”
Then, politicians should be so boastful. Don’t overpromise. (Ask Barack Obama about that. He said if we don’t pass the ARRA stimulus bill, the unemployment rate would rise above a certain level. Well, the stimulus passed, the unemployment rate went above that level, and it was several years before it fell below. In other words, unemployment was worse with the stimulus than Obama said it would be without the stimulus.) “The second important lesson that can be learned from the Kansas experience is economic growth resulting from bold tax reductions takes time. Governor Brownback’s previous comments about the Kansas tax reforms being ‘a shot of adrenaline’ to the state’s economy continued to hound him throughout the ups and downs of revenue and economic reports. Setting expectations too high or too early can make pushing forward with future reforms nearly impossible, while setting unrealistic expectations can lead to the unwinding of sound economic reforms.”
Finally: “Even though the tax reductions improved economic growth, the lack of commensurate spending reductions led to trouble for the state’s budget. Budget shortfalls and tough negotiations about possible tax increases mean uncertainty for businesses and families, which can hamper some of the positive economic effects of decreasing taxes.”