Governor Sam Brownback disappointed many Kansans when he failed to offer a long-term plan in his State of the State address on how to get Kansas out of its fiscal hole. Instead, the governor reiterated that he believes his tax plan is working.
News editors across the state, budget and tax experts, and most Kansans disagree. Also, the majority of Kansans, and many businesses, including Koch Industries, are ready to have the state’s tax exemption on pass-through business income repealed. House Bill 2013 would put these business owners back on the tax rolls, which would be applied retroactively to 2017. This would bring in an estimated 200 million dollars, which is still not enough to close the state’s fiscal deficit. What is needed is a long-term solution that would result in a more stable revenue and budget plan.
Brownback critics say that the state’s tax policy is not equitable and amounts to picking winners and losers as those on payrolls pay income taxes regularly and have also lost some tax deductions while tax exemptions apply to pass through businesses.
Former state legislator Mark Hutton of Wichita testified at the Legislature recently that the state has invested a billion dollars in the governor’s tax policy. Also, the predicted job growth for Kansas has not occurred: 9,300 jobs have been lost since December 2015.
Several possibilities have been floated to meet this year’s fiscal shortfall. One is to dismantle the Children’s Initiatives Fund. Another is to sell future tobacco settlement proceeds that are used to fund early childhood education programs. Governor Brownback could also borrow $300 million from the state’s pooled money investment fund, which Budget Director Shawn Sullivan does not like because it is a short-term fix. A worse alternative would be to find $340 million to cut in state spending between now and the end of June.