Tag: Kansas legislature

Articles about the Kansas legislature, both the House of Representatives and the Senate.

  • Spending and taxing in the states

    TaxIn the current policy debate in Kansas, we often compare our state with Texas. The prevailing themes sounded by Democrats and other spenders include that because Texas has no income tax, its other taxes (sales and property) are higher. We also hear that Texas is “atop a sea of oil” from which the state collects a gusher of tax revenue.

    But what are the facts? Regarding taxation: In 2011 Kansas state government collected $2,378 in taxes for each person. Texas collected $1,682. We see that Texas collects far less tax per person than does Kansas. Texas may have higher sales or property taxes than Kansas, but the total tax burden in Texas is lower.

    Spending follows the same pattern. In 2011 Kansas state government spent $5,115 per person in total, with $1,974 in general fund spending and $130 in bond spending. For Texas the total was $3,718 spent per person in total, with $1,654 in general fund spending and $50 in bond spending.

    The lower level of spending means Texas has a less burdensome state government, which allows more money to remain in the productive private sector. In Kansas, we spend more on government.

    The “sea of oil” and bountiful severance tax revenue: In 2011 Kansas, which has a severance tax of its own, collected $42.54 in this form of tax for each person. How much did Texas collect from its severance tax? $104.29 per person. The difference between the two — $61.75 per person per year — is only a small portion of the difference between Kansas and Texas taxation.

    To see how your state compares with others in spending, use the interactive visualization below. To use the visualization, click the check boxes to add or remove states and years from the chart. Use the visualization below, or click here to open it in a new window. Data is from National Association of State Budget Officers and U.S. Bureau of Economic Analysis (BEA); visualization created by myself using Tableau Public.


    (alternate link to the above table)


    (alternate link to the above table)

  • Kansas Senate and staggered terms

    Would staggered terms in the Kansas Senate make a difference?

    Kansas Capitol

    The tax debate in Kansas centers on a promise made to voters: That the sales tax increase will be allowed to expire this year, as current law specifies. Members of the House of Representatives seem to have a solemn grip on this promise, while senators are more willing to keep the current high sales tax rate in exchange for lowering other taxes (or something else).

    With two-year terms, all 125 members of the House will face the electorate next year. None of the 40 senators will, as they have three years until their next election to their four-year terms.

    Does the distance to the next election make a difference? Kansas is uncommon, but not unique, in that it has legislators that are elected to lengthy terms, but not in a staggered fashion. (See Ballotpedia, Length of terms of state senators.)

    California, for example, has 40 senators like Kansas, but their terms are staggered so that half the positions are up for election every two years. But in Kansas, all 40 senate seats are elected at the same time.

    So in Kansas next year, all House members are facing elections, while no Senators face the same scrutiny by voters.

    Does that account for the difference in positions taken by the two chambers? In three years, when senators face voters, will this year be remembered?

    Should Kansas change the senate so that terms are staggered? Yes, I think so. Let’s elect odd-numbered districts in one election cycle, and even-numbered the next. In 2014, one of these groups — half the senate seats — will be elected to two-year terms to get the stagger started. Flip a coin to see which group starts.

  • Kansas looks better in Rich States, Poor States report

    A new edition of Rich States, Poor States signals a brighter future for Kansas.

    Rich States, Poor States, sixth edition

    Last week American Legislative Exchange Council (ALEC) released the sixth edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

    ALEC is a nationwide organization of state legislators, the center-right counterpart of the center-left National Conference of State Legislatures (NCSL).

    In the forward-looking economic outlook ranking, Kansas moves up to eleventh place. That’s ahead of Texas (12), Colorado (16), Oklahoma (19), Missouri (23), Iowa (25), and Nebraska (37).

    The report praises tax reform legislation Kansas passed in 2012. In a section headed “The Kansas Uprising”:

    Gov. Sam Brownback campaigned in 2010 promising a tax cut to make the Kansas economy more competitive. But his plan to reduce tax rates and close loopholes ran into trouble in the Senate, which had been controlled by opponents of tax reform. The governor managed to pass his tax cut, but the Left-leaning Senate coalition refused to cut loopholes and pork spending projects. … The most outside of the box section of the plan is the “Small Business Accelerator,” which exempts all non-wage income from taxation for all pass-through entities. This means that the vast majority of small businesses in Kansas are now not subject to an income tax on their business earnings. This includes all sole proprietorships, partnerships, S corporations, and limited liability companies (LLCs). … While the Kansas tax reform plan has received criticism from both sides of the political spectrum, the resulting economic growth in Kansas speaks for itself. The plan is not perfect, but it is a bold step toward pro-growth tax reform that will certainly continue to unlock more of Kansas’ economic potential.

    No praise, however, for public pension reform. Commenting on lack of progress in converting to defined-contribution plan and a proposal to borrow additional money for fund KPERS, the report concludes:

    The result was a double loss for pension reform advocates in Kansas. There would be no structural reform, and the Kansas retirement system and taxpayers would take on $1.5 billion in additional debt. While the proposal for fundamental pension reform failed this session, fiscally conservative legislators and Gov. Brownback are optimistic that real reform will have a good chance of passing in the future.

    The bill to issue the KPERS bonds is still pending in the legislature.

    An important chapter in this year’s report is titled “There They Go Again: A New Dose of Junk Economics.” This chapter addresses critics of Rich States, Poor States. In particular, this chapter explains the caution required when using per-capita statistics.

    Kansas among the states

    Rich States, Poor States evaluates state economies two ways. The “Economic Outlook Ranking” is a forecast looking forward. It is based on factors that are under control of the states. The “Economic Performance Ranking” is a backward-looking rating that measures state performance, again using variables under control of each state.

    The Economic Performance Rank considers a state’s gross domestic product, absolute domestic migration, and nonfarm payroll employment. This ranking details states’ individual performances over the past ten years based on the economic data.

    For Economic Performance Ranking, Kansas is ranked 35th among the states. In previous years, Kansas was ranked 39th, 40th, and 34th. Kansas has made some progress in this area.

    The second measure, the Economic Outlook Rank, is 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.”

    It’s in this ranking that Kansas made most progress. Kansas is ranked 11th, up from 26th the year before. In previous years, Kansas averaged around 26th place.

    Notable areas where Kansas ranks better than average in Top Marginal Personal Income Tax Rate (15), Recently Legislated Tax Changes (6), State Liability System Survey (5), State Minimum Wage (1), and being a right-to-work states.

    Kansas scores low in Property Tax Burden (29), Sales Tax Burden (35), Debt Service as a Share of Tax Revenue (41), Public Employees Per 10,000 of Population (48), and having a low number of tax expenditure limitations.

    Read the report at Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

  • In Kansas, it’s more important to be right than quick

    Kansas Legislature

    It’s more important to finish the legislative session with policies that will work to the benefit of Kansas rather than to finish on any particular day.

    Legislators need to finish the session with a tax plan that does not increase the amount of tax revenue flowing to the state. As explained in Taxes and state income growth, “taxes used to fund general expenditures are associated with significant, negative effects on income growth.”

    Without a doubt, there are ways to collect taxes that are better than others. But lower taxes are the most important goal.

    It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

    Personal income growth, Kansas and selected states, 2013

    Here’s what the Kansas Legislature needs to do:

    • Keep the current sales tax rate.
    • Eliminate sales tax on food.
    • Reduce individual income and corporate income tax rates.
    • Get serious about reducing spending.

    It would be best if we could accomplish these goals sooner rather than later. But it’s penny wise and pound foolish to object to the $45,000 per day cost of running the legislature as long as we are making progress towards these goals.

  • Taxes and state income growth

    Taxes flowing to the capitol

    If Kansas wants to experience growth in income, it’s important that the legislature finish the session without raising taxes. The paper The Robust Relationship between Taxes and U.S. State Income Growth by W. Robert Reed, published in National Tax Journal, establishes a link between high taxes and negative effects on income growth. The abstract of the research report explains:

    I estimate the relationship between taxes and income growth using data from 1970 to 1999 and the forty-eight continental U.S. states. I find that taxes used to fund general expenditures are associated with significant, negative effects on income growth. This finding is generally robust across alternative variable specifications, alternative estimation procedures, alternative ways of dividing the data into “five-year” periods, and across different time periods and Bureau of Economic Analysis (BEA) regions, though state-specific estimates vary widely. I also provide an explanation for why previous research has had difficulty identifying this “robust” relationship.

    As Kansas must produce a balanced budget each year, reducing taxes means reducing spending. Therefore, Kansas needs to get serious about reducing government spending. Some ideas may be found in the article In Kansas, there are ways to reduce the cost of government.

    (Although the state must balance its budget each year, Kansas has managed to accumulate over $16 billion in debt, about $5,591 for each person. See Kansas Total Indebtedness Exceeds $16 Billion.)

    The full article is on taxation and income growth is The Robust Relationship between Taxes and U.S. State Income Growth.

  • What Kansas should do

    As the Kansas Legislature struggles to end its 2013 session, budgetary and taxation issues remain to be resolved. It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

    Personal income growth, Kansas and selected states, 2013

    Here’s what the Kansas Legislature needs to do:

    • Keep the current sales tax rate.
    • Eliminate sales tax on food.
    • Reduce individual income and corporate income tax rates.
    • Get serious about reducing spending.

    The legislature should reduce Kansas income tax rates by an amount that would be revenue-neutral, so that state spending does not grow. This moves Kansas towards more of a “Fair Tax” model, which many economists agree is better than taxing income. Elimination of the sales tax on food removes much of the regressive nature of the sales tax.

    To the extent that the legislature believes it needs other funds, take it from transportation funding. We’ve spent a lot on roads and highways in recent years. It’s enough for now.

    Another important thing the legislature needs to do is get serious about reducing government spending. Kansas lost an important chance to save money — although a relatively small amount — when school choice programs failed to pass. These programs, across the country, save state and local governments money. Unfortunately, Kansas legislative leaders did not use this argument.

    Job growth, Kansas and selected states, 2013

    How to save

    In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

    Each of these bills represented a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

    One bill was called the Kansas Streamlining Government Act, another would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships, and another would have created performance measures for state agencies and report that information to the public. More information on these bills is at Kansas budget solution overlooked.

    We have to wonder why these bills — or similar measures — were not introduced and advanced this year when the opposition in the Senate is weaker. These are the types of measures we need to take as a state.

  • Kansas freedom scorecard released

    To help Kansans understand how legislators vote, Kansas Policy Institute has produced the Kansas Freedom Index for 2013.

    Legislative scorecards like this are important as they let citizens know how legislators have actually voted, which is sometimes different from their campaign rhetoric, and even different from their current proclamations. Generally, scorecards include a large sampling of votes, so that no single issue paints a member into a corner.

    [powerpress url=”http://wichitaliberty.org/wp-content/uploads/2013/05/james-franko-kansas-policy-institute-joseph-ashby-show-2013-05-17-excerpt.mp3″]James Franko of Kansas Policy Institute joins Bob Weeks on the Joseph Ashby Show to discuss the Kansas Freedom Index. Then, Bob runs down the scores for Wichita-area legislators.

    The Kansas Freedom Index, as produced by KPI this year, is important and significant because it focuses on issues of economic freedom along with education freedom, which was added this year. So far, 45 bills have been included in the scorecard, and as the legislature is still in session and has at least two important bills to pass, there may be additions to the scorecard.

    This year’s index is a continuation of the construction of indexes for past years, many of which may be found at Kansas Economic Freedom Index.

    In a press release KPI president Dave Trabert said “An informed citizenry is an essential element of maintaining a free society. Having a deeper understanding of how legislation impacts education freedom, economic freedom and the constitutional principles of individual liberty and limited government allows citizens to better understand the known and often unknown consequences of legislative issues.”

    He added, “Our 2012 index made clear that support of economic freedom isn’t an issue of political affiliation — the highest and lowest score in the Senate were both held by Republicans. The 2013 results bear out the same as a wide range of scores exists within both parties. Too often votes come down to parochial or personal issues and the idea of freedom is left on the legislature’s cutting room floor. Hopefully, the Kansas Freedom Index can start to recalibrate citizens and legislators towards supporting the freedoms of everyday Kansans and not be driven by politics.”

    The importance of economic freedom

    Milton Friedman: Capitalism and Freedom

    Why is economic freedom important? Here’s what Milton Friedman had to say in the opening chapter of his monumental work Capitalism and Freedom some 50 years ago:

    The Relation between Economic Freedom and Political Freedom

    It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arrangements. The chief contemporary manifestation of this idea is the advocacy of “democratic socialism” by many who condemn out of hand the restrictions on individual freedom imposed by “totalitarian socialism” in Russia, and who are persuaded that it is possible for a country to adopt the essential features of Russian economic arrangements and yet to ensure individual freedom through political arrangements. The thesis of this chapter is that such a view is a delusion, that there is an intimate connection between economics and politics, that only certain arrangements are possible and that, in particular, a society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom.

    Economic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.

    For more about Friedman and his thoughts on economic freedom, see Milton Friedman, the Father of Economic Freedom.

    Economic freedom is the most important factor in determining the well-being of people across the world. Where economic freedom exists, countries become wealthy. In introducing the Economic Freedom of the World report, its authors write: “Economic freedom has been shown in numerous peer-reviewed studies to promote prosperity and other positive outcomes. It is a necessary condition for democratic development. It liberates people from dependence on government in a planned economy, and allows them to make their own economic and political choices.”

    One of the authors of the Economic Freedom of the World report, Robert Lawson, expands on the importance of economic freedom: “The big question is: Do countries that exhibit greater degrees of economic freedom perform better than those that do not? Much scholarly research has been and continues to be done to see if the index [of economic freedom] correlates with various measures of the good society: higher incomes, economic growth, income equality, gender equality, life expectancy, and so on. While there is scholarly debate about the exact nature of these relationships, the results are uniform: measures of economic freedom relate positively with these factors.

  • Kansas needs to focus on growth when wrapping up session

    Oil painting "Tragic Prelude" (1938-40) by John Steuart Curry (1897-1946)As the Kansas Legislature prepares to end its 2013 session, budgetary and taxation issues remain to be resolved. It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

    First, let’s stop talking about the need to “pay for tax cuts.” The only way in which tax cuts have a cost is if you believe that your income belongs first to government, and then to you. While that schema is preferred by Kansas Progressives, it’s contrary to freedom and destructive to jobs and prosperity. Kansas will be better off if Kansans are able to control more of their own spending, rather than having government spend it for them.

    Second, we must remember that the projected “holes in the budget” or deficits have two moving parts: Income and spending. Any deficit or surplus is produced equally by both factors. A reduction in income to the government produces a deficit only if government chooses to keep spending.

    Third, let’s stop talking about “irresponsible tax cuts” and how cutting taxes is an “experiment.” To proceed as Kansas has — that would be irresponsible, as we know that Kansas has been underperforming relative to other states. No experimentation is needed. We know that Kansas has not done well.

    Fourth, we need to make sure that everyone is starting from the same set of facts. Here’s one example: While critics of the new Kansas tax policy focus on the elimination of state income taxes on certain forms of business organization, marginal tax rates were lowered for everyone. Additionally, the standard deduction was increased for everyone, meaning that zero tax is paid on a larger share of everyone’s income.

    But one tax was raised. Kansas had a program that rebated sales tax paid on food. This was limited to those with modest incomes or over a certain age. It is generally recognized that the sales tax is a regressive tax, meaning that those with low incomes pay a larger share of their income in tax. Reducing this perceived inequity was the goal of the credit program.

    In recognition of this, Kansas should eliminate the sales tax on food, especially if we keep the current high sales tax rate. This eliminates the clunky tax credit program and lets everyone save on food taxes every day, not just at tax filing time.

    Critics also say that taxes were raised on some low income families. This argument is based on some tax credit programs that were eliminated, such as the tax credit for child and dependent care expenses, and another tax credit for child day care expenses. It’s important to remember that these programs were implemented as a tax credits, and they are properly categorized as welfare spending accomplished through the tax system. If we want to keep this welfare spending, let’s do it some other way. Spending through the tax system complicates the understanding of government finances.

    What Kansas should do

    Here’s what the Kansas Legislature needs to do: Keep the current sales tax rate, eliminate sales tax on food, and reduce individual income and corporate income tax rates. Reduce the income tax rates by an amount that would be revenue-neutral, so that state spending does not grow. This moves us towards more of a “Fair Tax” model, which many economists agree is better than taxing income. Elimination of the sales tax on food removes much of the regressivity of the sales tax.

    To the extent that the legislature believes it needs other funds, take it from transportation funding. We’ve spent a lot on roads and highways in recent years. It’s enough for now.

    Another important thing the legislature needs to do is get serious about reducing government spending. Kansas lost an important chance to save money — although a relatively small amount — when school choice programs failed to pass. These programs, across the country, save state and local governments money. Unfortunately, Kansas legislative leaders did not use this argument.

    More ways to save: In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

    Each of these bills represented a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

    One bill was called the Kansas Streamlining Government Act, another would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships, and another would have created performance measures for state agencies and report that information to the public. More information on these bills is at Kansas budget solution overlooked.

    We have to wonder why these bills — or similar measures — were not introduced and advanced this year when the opposition in the Senate is weaker. These are the types of measures we need to take as a state.