Voice For Liberty

Tag: Mark Parkinson

  • Kansas Governor misleads Kansans on taxes

    By Dave Trabert, Kansas Policy Institute.

    If President Reagan had attended Kansas Governor Mark Parkinson’s press conference last Friday, he likely would have said, “There you go again…” in response to Parkinson’s claim that $9 billion in tax cuts and exemptions over the last decade are to blame for the budget crisis. South Carolina Congressman Joe Wilson (R) might have put it less delicately, but both would have been justified in challenging the governor’s claims.

    The $9 billion dollar figure comes from a Department of Revenue (DOR) estimate of the effect of selective tax changes enacted between 1995 and 2009. I say “selective” because DOR only included changes that reduced taxes but conveniently ignored changes that increased taxes; they also made no allowance for taxes generated from economic activity as a result of any changes. Further, the $9 billion total is artificially inflated. The largest item on the list is a property tax “reduction” of $4.4 billion that doesn’t belong on the list. The amount represents the difference between collecting 35 mills for school funding versus the current 20 mills. The change was made in the mid-90s following property revaluation; when property values were adjusted upward to market value, the mill rate was supposed to be lowered so that the higher property values generated the same amount of property tax. By the way, property taxes increased 96% between 1995 and 2008.

    The governor also claims that big business and wealthy people have benefited the most from those changes, with “ordinary Kansans” receiving virtually nothing. Well, there he goes again. The second largest amount on the DOR list is car tax reductions at $1.4 billion. A lot of ordinary Kansans benefited from that one. Other large tax reductions that Parkinson seems to be overlooking include:

    • $616.6 million to reduce the single income rate
    • $446.5 million to increase the earned income tax credit
    • $368.7 million to increase the personal exemption
    • $356.6 million to increase the food sales tax rebate
    • $174.2 million to increase the standard deduction

    There’s also $825.9 million attributed to reductions in the inheritance, or “death” tax. The two primary reasons for making that change are to avoid double taxation (the income was already taxed once when it was earned) and to encourage people to stay in Kansas and continue paying income, sales and property taxes. Those with high-value estates can easily (and do) move to other states where they can avoid double taxation and leave their estates to their families.

    It’s also important to understand that most of the changes on that misleading $9 billion list were implemented in the 1990s following 75% revenue growth from 1990 to 1998, much faster than necessary to sustain spending. Government could easily afford to reduce the tax burden and the vast majority of that relief was directed to “ordinary Kansans.”

    So what about the governor’s claim that tax reductions are to blame for the budget crisis? Once again, cue President Reagan. Revenue grew another 41% over the next ten years, well beyond inflation (28% according to the Midwest Urban Consumer Price Index). At the same time, however, general fund spending grew 61%. That is the reason we’re in this mess. In fact, if spending had been held to 4.5% growth over just the last five years, we would have finished last year with a $3 billion surplus and could have easily weathered the recession.

    Then there’s the claim that the state has already reduced spending by more than a billion dollars. There he goes again! Prior to changes announced last week, the governor’s own estimate put FY 2010 spending at $5,451 billion; last year’s actual spending was $6.064 billion. That’s a reduction of $613 million; a big number to be sure, but not even close to a billion dollars.

    There were some tax reductions over the years that were not good policy; sound tax policy says reductions should be broad-based and not favor one group over another. But the facts clearly demonstrate that the vast majority of our budget problems stem from spending well beyond our means. President Reagan once explained it as only he could: “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

    Speaking of no responsibility, Governor Parkinson failed to mention that he not only voted for, but actually led the charge for some of the sales tax exemptions for which he now castigates the legislature for passing.

    It’s bad enough having to work our way out of a budget situation that is largely self-inflicted. Distorting or ignoring the facts to justify a tax increase is a disservice to “ordinary Kansans.”

  • Strange happenings in Kansas at Washington Days

    As reported by Martin Hawver in Hawver’s Capitol Flash:

    Lobbyists were talking about one of the stranger receptions that they’ve attended in recent memory: one organized by [Kansas Governor Mark] Parkinson to introduced lobbyists and political operatives to Tom Holland, D-Baldwin City, who is seeking the governorship.

    Strange: Lobbyists weren’t asked for checks, weren’t pressured, just given a chance, for free, to talk to Holland and learn more about him. That isn’t often done in Kansas.

  • State budget ‘gap’ is all about perspective

    By Dave Trabert, Kansas Policy Institute

    When businesses or individuals talk about cutting their expenses, it means they are going to spend less money that they did in the past. But when governments talk about budget cuts they often have a different perspective: they are spending less than they had hoped to but not necessarily less than the year before. For example, we often heard how Kansas schools had to cut their budgets last year but they still spent $12,660 per pupil, or 3.9% more than the previous year.

    “Gap” is another example of how the meaning of words differs depending upon one’s perspective. When it’s said that a tax increase is needed to close a $400 million budget “gap” in the 2011 state budget, one might reasonably assume that that means recession-driven revenue declines have created a “gap” that needs to be filled to maintain the same level of spending.

    But that is not the case. The Consensus Revenue Estimate calls for general fund revenues to decline by $122.2 million. Governor Parkinson’s budget proposal calls for spending to increase $380 million; that’s 7% more than we’ll spend this year and $1.1 billion more than we spent in FY 2005. From a revenue, or taxpayer, perspective, the gap is $122.2 million — not $400 million.

    It really does come down to perspective. Most of the proposed expenditure increase is to replace declines in federal stimulus money, so from the government’s perspective there is less money to spend unless taxes are increased. (Another way to replace those federal tax dollars is to become more efficient and reduce spending without cutting services, but the bureaucracy doesn’t seem interested in that option.)

    Governor Parkinson is proposing a significant spending increase but he deserves no blame for redefining the meaning of “gap;” his budget proposal was very forthright in explaining his rationale for spending more money. (OK, maybe he could have corrected those who are overstating the amount of the “gap” but at least he didn’t start it.)

    Whether we should raise taxes to increase spending as the governor and others are proposing is a legitimate topic of debate that needs to be held out in the open, but taxpayers need to know the truth about the details in order to make informed decisions.

    You can download more commentaries, news and publications at www.kansaspolicy.org.

  • Cause of Kansas budget gap is spending

    Kansas Governor Mark Parkinson says Kansas has a $400 million budget gap, and he’s proposed increasing sales and cigarette taxes to close it.

    The source of nearly all this gap is the governor’s proposal for increased spending in the fiscal year 2011 budget. State general fund spending for FY 2010 — that’s the current budget year we’re a little more than halfway through — is estimated to be $5,451.1 billion, according to the governor’s budget report release a few weeks ago.

    For FY 2011, the governor proposes to spend $5,831.1 billion, which is $380 million more than spending this year.

    There’s nearly all the $400 million gap right there.

    Revenue is projected to fall next year by $122 million, according to the budget report.

    If we could hold spending steady for next year — and remember that inflation is running at very low levels — we could get by without a tax increase. If the governor and the legislature would consider tapping some of the available Kansas fund balances, we could even increase spending without tax increases.

  • Kansas news digest

    News from alternative media around Kansas for January 20, 2010.

    Letter form the Newsroom — Tax Exemptions Edition

    (State of the State Kansas) “This week we will also look at the issue of tax exemptions where we will hear from a number of people, including, Revenue Secretary Joan Wagnon, Representative Marc Rhoades (R) and the Kansas National Education Association.”

    Republican Candidates For Congress In The 4th District Debate

    (State of the State Kansas) “The Great American Forum hosted the first debate between the Republican 4th Congressional District Candidates Friday night. We put in a word from each of them here starting with ladies first in reverse alphabetical order.”

    Investments alone won’t restore KPERS deficit

    (Kansas Reporter) “LAWRENCE, Kan. – Better investment results alone will not pull battered government pension plans out of the financial ditch, according to some new research by a University of Kansas economist. Fundamental reforms will be needed in both how investment targets are calculated and how individual states determine what will be required to keep promises made to retirees.”

    Don’t expect another $40 million from tax settlements

    (Kansas Reporter) “TOPEKA, Kan. – Kansas legislators shouldn’t count on millions of dollars more from tax settlements to balance the budget, Kansas Department of Revenue Secretary Joan Wagnon told House Appropriation committee members Tuesday.”

    Sales tax rates go up in Kansas, not down

    (Kansas Reporter) There’s a danger in “temporary” tax increases: “TOPEKA, Kan. – What goes up in Kansas doesn’t always have to come down, especially when it comes to the sales tax rate, according to research on the history of sales tax increases.”

    Gov. Sebelius assisted AFSCME-CCPT in unionizing child care providers in Kansas

    (Kansas Watchdog) “Gov. Kathleen Sebelius helped the American Federation of State, County and Municipal Employees (AFSCME) unionize as many as 7000 family child care providers.”

    Spending limit proposal quietly makes the rounds

    (Kansas Reporter) “TOPEKA, Kan. – With a projected budget deficit of nearly $400 million on the horizon, there is a lot of talk around the Kansas Capitol of a constitutional amendment to set up a rainy day fund to have money set aside for when the next recession arrives. But the most prominent proposal — introduced by state Sens. Jon Vratil, a Leawood Republican, and Laura Kelly, a Topeka Democrat earlier this month — is not the only one.”

    Waiting lists for state services expected to grow

    (Kansas Health Institute News Service) “TOPEKA – More than 5,700 Kansans with physical or developmental disabilities are waiting for Medicaid-funded services designed to help keep them out of a nursing home or state hospital. About 2,000 people on the waiting list are developmentally disabled children or adults who are receiving some government-funded services but are waiting for others for which they are eligible.”

    Taxpayers Shouldn’t Be Burdened with Solving Government’s Spending Problem

    (Americans for Prosperity, Kansas) “‘Considering that over a six-year time frame, from FY 2004 to FY 2009, spending increased by a staggering 40 percent, it was disappointing to once again hear Gov. Parkinson fail to identify excessive spending as being the real reason why Kansas is facing a budget shortfall,’ said AFP-Kansas state director Derrick Sontag. ‘The budget crisis we are currently experiencing is a direct result of our state government living beyond its means, thus it is simply unacceptable for Gov. Parkinson to call for tax increases on Kansas families and businesses.’”

  • Kansas governor proposes taxes, smoking ban, green energy projects

    Kansas Governor Mark Parkinson‘s State of the State address Monday proposed two new taxes, a comprehensive statewide smoking ban, and a cabinet team to promote green energy projects. He didn’t propose closing tax exemptions, and he made no mention of an available method that could help Kansas make it through a fiscal shortfall.

    The complete text of the governor’s address, as prepared for delivery, is available at Protecting What We Have, Building for the Future.

    What’s missing from the governor’s address is recognition that the state is sitting on hundreds of millions of unused cash that could be tapped to get the state through a tough spot. The Kansas Policy Institute has performed research and analysis that indicates that by spending down these fund balances, Kansas schools and agencies could continue delivering services without requiring a tax increase.

    In his response to the governor, which was recorded before the governor spoke, Speaker of the House Mike O’Neil opposed tax increases. He didn’t mention the fund balances.

    Instead of making use of an untapped resource, the governor proposed tax increases. In particular, the governor proposed taxes that fall hardest on poor and low income people.

    His proposed cigarette tax falls hardest on low-income people, as they smoke proportionally more than high-income people, and spend proportionally more of their income on cigarettes.

    The increase in sales tax again falls most harshly on low income people, as they spend nearly all their income. Wealthier people may save a lot of their income, and saving isn’t subject to sales taxes, at least not for now. Purchasers of stocks and bonds don’t pay sales tax.

    Although the sales tax is proposed to last just three years (the bulk of it, anyway; two-tenths of a cent is proposed as a permanent tax to fund a highway plan), there is a definite risk that these taxes become permanent. The Intrust Bank Arena, which just opened in downtown Wichita, was funded by a temporary sales tax. That tax ended as scheduled, but there were those — including at least one officeholder — who wanted the tax to continue.

    At the same time the governor proposes to raise money through increased taxation of cigarettes, he also proposes a comprehensive statewide smoking ban. This is at cross purposes. Does the governor want people to smoke or not?

    It will also be interesting to see how comprehensive any proposed smoking ban legislation will be. The ban proposed last year exempted state-owned casinos like the one that recently opened in Dodge City.

    The governor didn’t address eliminating the many tax exemptions, which the Secretary of Revenue is promoting as a way to raise perhaps $200 million per year in revenue.

    The governor didn’t mention Schools for Fair Funding’s decision to sue the state for more school spending.

    In his address, O’Neil said that Kansas families and businesses are struggling and making sacrifices.

    While tax revenue to the state has fallen, demand for government spending has continued. Raising taxes now near the end of a recession, he said, is short-sighted and counterproductive. It is not prudent to raise taxes. “Raising taxes now in the middle of a severe recession would mean losing tax-paying businesses that are already struggling to survive.” Loss of these businesses and their employees would make the fiscal situation worse, he said.

    This applies to either new taxes or to the elimination of tax incentives. Either would harm growth and reduce capital that businesses need. “Simply put: Kansas businesses can’t pay more unless they make more.” While a tax hike may be attractive in the sort term, increasing taxes is harmful in the long run.

    O’Neil said it’s a false choice to either allow business to keep its money or fund government’s obligations. Business must be strong if government is to be fiscally sound. If business grows and prospers, the state’s fiscal situation will improve.

    O’Neil said the 2010 legislature will thoroughly examine all spending to make sure that government is operating efficiently, and is spending only on those things necessary to fulfill the legitimate role of government.

    He supported a budget stabilization process — by constitutional amendment if necessary. He said we should work towards using zero-based budgeting. More audits are needed, and he reminded us that Kansas used to have a state auditor.

    On education funding, O’Neil said that when all sources of funding are considered, schools have been cut less than 1.5% on average, and schools are receiving more funding than in fiscal year 2008. The school funding lawsuit is irresponsible, he said. K through 12 education cuts have not been as severe as cuts to other state agencies.

  • Kansas news digest

    News from alternative media around Kansas for November 30, 2009.

    Parkinson balances budget as promised, but now gearing up for tax hike

    (Kansas Liberty premium article) Analysis of the governor’s budget cuts, with a look forward: “Kansas Gov. Mark Parkinson released a column yesterday illustrating how Monday’s cuts have devastated various state agencies. Parkinson argued that any possible inefficiency within state agencies has been eliminated through the latest round of allotments. … Parkinson, in addition to some legislators, have already started to lay the foundation for tax increases and so-called ‘revenue enhancements.’”

    Also from Kansas Liberty see Agencies react to governor’s cuts.

    Kansas legislators butt heads on K-12 funding cuts

    (Kansas Liberty) “Kansas Gov. Mark Parkinson cut K-12 funding by $36 million yesterday, placing schools at the same level of funding they received in 2006. The federal government requires that states continue to fund their schools no lower than the 2006 level to maintain stimulus funding.”

    Moore’s retirement spurs Republican interest in Third District race

    (Kansas Liberty) “The Republican Party demonstrated a renewed interest in the Third District congressional race today after Rep. Dennis Moore, a Democrat, announced he would not be seeking re-election. Within hours of Moore’s announcement, the list of possible and probable Republican candidates more than doubled in size.” Mentioned in this article: 2008 challenger Nick Jordan, House Appropriations Chair Kevin Yoder R-Overland Park, Kansas senators Karin Brownlee, R-Olathe and Jeff Colyer, R-Overland Park, and Charlotte O’Hara.

    Letter from the Newsroom — KPERS Edition

    (State of the State, Kansas) “Later this week we focus on the the health of the Kansas Public Employees Retirement System. The Center for Applied Economics at Kansas University recently issued a report questioning the sustainability of the pension system and we speak with people at the heart of the debate including one of the co-authors of the study, Art Hall. These stories will be posted later this week so check back as we post them.”

    Parkinson: No easy budget answers

    (Kansas Watchdog) “Gov. Mark Parkinson said $258.9 million in spending cuts he made to balance the state’s 2010 budget will touch every agency and department. ‘This is the most challenging time in Kansas state budget history,’ Parkinson said Monday during the announcement. He said the state is dealing with an unprecedented fourth year of revenue decline, 2008 through 2011.”

    Is Governor Parkinson Setting the Table for a Tax Increase?

    (Kansas Watchdog) “Kansas Governor Mark Parkinson and others in his administration are loath to publicly say they want a tax increase to address the state’s budget challenges. Parkinson promised House Republicans he would make spending cuts, if needed after the 2009 Legislative session, in exchange for less contention over the budget at the end of the session. True to his word, Parkinson made the cuts. But take a look at some recent comments and consider what’s between the lines.”

    Kansas Ethics Commission to ask legislature for law changes

    (Kansas Watchdog) “‘Issue advocacy’ rules and less openness by some universities are among recommendations for new laws to be sent to the legislature by the Kansas Governmental Ethics Commission. One new law would require those involved with ‘issue advocacy’ to file contribution and expenditure reports like candidates and PACs if they spend $300 or more to engage in communications with voters 30 days before a primary election, or 60 days before a general election.”

    2009 Annual Report from Kansas Governmental Ethics Commission

    (Kansas Watchdog) “At their recent meeting the Kansas Governmental Ethics Commission discussed proposals for the Kansas legislature to consider in 2010.”

  • Play Powerball for the good of the Kansas budget?

    In an explanation presented to the Kansas House Appropriations Committee of how the Kansas state budget was balanced by Governor Mark Parkinson Monday, there’s a line item “Powerball income tax windfall.” The amount is $3.1 million, the result of a Kansan having won the multi-state jackpot not long ago.

    That this item had its own line is evidence of just how hard it is to balance the budget in the face of declining revenues. I’m surprised no one on the committee suggested we all buy Powerball tickets to help the Kansas economy.

    One of the ways the budget was balanced is to shirt ARRA (the federal stimulus) funds from next year to this year. Previously, Kansas had planned to use about half of the ARRA money this year, and half next. After Monday’s action, we’re now spending about two-thirds of it this year, with one-third left for next year, according to Kansas Budget Director Duane Goossen.

  • ‘Efficiency Kansas’ introduced in Wichita

    At stops in Topeka and Wichita, Kansas officials introduced the Efficiency Kansas loan program.

    This is a program funded by the American Recovery and Reinvestment Act of 2009, better known as the stimulus bill. In Kansas, the State Energy Office, a subsidiary of the Kansas Corporation Commission, was awarded $38 million to foster energy efficiency for homes and businesses in Kansas. That office will manage the program.

    Kansas Treasurer Dennis McKinney was in Wichita to introduce the program and help give tours of a demonstration home in west Wichita. In his remarks he said that the program engages private sector forces so that the program runs effectively and efficiently.

    The program starts when a homeowner or business owner contacts a participating lender or utility company. The customer selects an energy auditor from a list of those qualified to work in the program, and the energy audit is performed. The result is a plan. Then, the customer seeks bids from contractors based on the plan. If the State Energy Office approves, work can start.

    Homes can receive up to $20,000 in improvements, while small businesses can receive up to $30,000.

    In this program, it is participating banks or utility companies, not the state, that make the loans and it is they who bear the risk of credit loss. The loans are fixed-rate, up to 15 years term, with an interest rate of not more than 4%. The State Energy Office provides rebates to lenders to cover $250 of loan origination fees.

    For the demonstration house in Wichita, a three bedroom ranch-style house of 1,440 square feet built in 1963, the cost of the recommended improvements is $2,922. Estimated monthly energy savings are $35, and the monthly payment on the loan is $24. The demonstration house in Topeka required $7,617 of work, with monthly savings estimated at $89, and payment of $57.

    Analysis

    In the press release, Kansas Governor Mark Parkinson said “this program will help save jobs and put more Kansans back to work.” Many would disagree with this assessment, as the program is paid for with borrowed money that must be paid back at some later date. The taxes necessary to repay this borrowing will reduce jobs in the future.

    I asked McKinney that if these energy efficiency investment are wise economically, why can’t we let people make them on their own rather than having the federal and state government involved. His answer was that the program makes loans available at 4% interest rather than 8%, and the program would gain the attention of entrepreneurs to help get more homes upgraded.

    As with many government programs, this essentially boils down to a subsidy. The program participants will be able to borrow money at a below-market interest rate.

    While some people might feel it is worthwhile for the government to subsidize low or modest income homeowners, the owners of the Wichita home probably don’t fall into that category. According to the Sedgwick County Treasurer, the house has an appraised value of $99,800. There was a large flat-panel television among its furnishings. Should Americans of all income levels pay taxes so that this family can save a few dollars a month on a loan?

    Further, although the program is touted as being low cost to the state, the state pays $250 for each loan to the lending bank. The first 1,000 participants will receive $350 to help pay for the energy audit.

    Prior to this program, the State Energy Office had just five employees and a budget of $500,000. Now the office’s website lists ten employees. While the costs of this program are paid for by the federal government, this should be of little comfort to taxpayers.

    Surprisingly, there was no mention of this program’s role to potentially reducing carbon emissions.