In Kansas, revenue flowing to the state has declined. How can our state cope with a loss in revenue?
One way would have been to set aside money in good times, the so-called “rainy day fund” idea that some groups have promoted. But Kansas didn’t do that. We spent all the revenue that flowed in during the recent prosperous years of the mid 2000s.
Governments can also cut spending by cutting services. They can also raise taxes.
Operating more efficiently is another option. In order to gauge how efficiently Kansas counties are operating in different areas of operation, the Kansas Policy Institute has gathered information from all Kansas counties.
Some interesting differences have been found. For Sedgwick and Johnson counties, the state’s two largest in terms of population, KPI found a huge difference in spending on county commissioners: $1.50 (on a per-person basis) in Sedgwick County, but $4.42 for Johnson County.
KPI estimates that if outlier counties (those that spend a lot, again on a per-person bases) reduced their spending to that of the median for counties with similar population, the savings could be in the range of several hundred million dollars per year.
From working on this project, KPI has several recommendations for counties regarding budget reporting. First, we should have a uniform chart of accounts for Kansas counties. Budgets and financial statements should be published in a standardized and easily understood format. Documents should be published online, retained for several years, and available in machine-readable format.
Kansas County Budget Analysis — In Search of Efficient Government
By Dave Trabert, Kansas Policy Institute.
It’s quite possible that twenty years from now we’ll look back on some of the decisions made during the current recession as either being responsible for catapulting Kansas into a much more competitive position for job growth and economic prosperity or causing the state to fall farther behind. Recessions certainly cause economic havoc as they unfold but they also create opportunities.
There are numerous examples of businesses that reinvented themselves and emerged from the recession in a much stronger and more competitive position, while competitors who tried to ‘ride out the storm’ were worse off than before the recession. Recessions naturally make customers much more open to change as they seek better value for their dollar. Imagine how a business would fare that tried to make up for reduced revenue by raising prices during a recession. Unless the business had a monopoly on an essential product it would likely lose even more customers, but that is exactly how many governments react in a recession — they raise prices on their customers.
There is ample evidence that higher taxes prompt customers (taxpayers) to leave. One example of such evidence can be found in a comparison of domestic migration data1 with the Tax Foundation’s most recent ranking of state and local tax burdens expressed as a percentage of income. The ten states with the highest combined state / local tax burden had a combined average 3.3% net loss from domestic migration (more U.S residents moving out of the state than moving in), whereas the ten states with the lowest tax burden had a combined average 3.8% net gain. The low-burden grouping includes one outlier, Louisiana, which suffered significant population loss following Hurricane Katrina; the average net gain of the other nine low-burden states is 5.0%.
Kansas has a domestic migration net loss of 2.5% over the same period and is ranked #38 among the states (#1 being the best). Kansas also has the worst performance in the region; Nebraska is the only other state with a net loss (2.3%) and other states have all gained population from domestic migration (Colorado 4.2%, Texas 3.4%, Oklahoma 1.1% and Missouri 0.7%).
Continue reading at Kansas County Budget Analysis — In Search of Efficient Government
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