TOPEKA CAPITAL JOURNAL: Why tax reform was necessary

Monday, July 3rd 2017

By Majority Leader of the Kansas House of Representatives Don Hineman

Last month, the Kansas Legislature enacted comprehensive tax reform, overturning Gov. Sam Brownback’s overly-aggressive 2012 tax cut. This return to common sense tax policy resulted from legislators listening to their constituents and fulfilling the promises they made during 2016 campaigns. In the end, a group of 88 representatives and 27 senators from across the political spectrum voted to override the governor’s veto and restore our state to firmer fiscal ground.

Brownback’s tax plan abandoned the “three-legged stool” approach to funding government, which had served Kansas well for decades by relying on a stable balance of income, sales and property. Instead, his plan dramatically slashed income taxes and created the small business exemption which many Kansans viewed as unfair. As predicted by those of us who opposed the measure, Kansas faced massive budget deficits. And when they came, the governor urged the Legislature to increase the sales tax, issue billions in new debt, sweep from the highway fund and use one-time sources of funding just to pay the bills. Finally, the Legislature said “enough is enough” and rejected the governor’s short-term fixes as being neither responsible nor conservative.

The fiscal strain created by the 2012 tax cuts caused public schools to suffer, increasing class sizes and reducing program offerings. Medicaid reimbursements were reduced, straining rural hospital budgets heavily reliant on those payments. Highway funds for preservation and maintenance were cut to unsustainably low levels. And despite the assurances of adviser Art Laffer that economic nirvana was just around the corner, Kansans continued to move out of state. Brownback and his allies insisted that his tax plan was working, offering as evidence cherry-picked data such as unemployment rate and new business starts. Those are not reliable indicators of economic growth, however, and plenty of other data shows a Kansas economy which continues to lag its neighbors and the nation.

Though raising taxes is never easy, it was unfortunately the only responsible option available. State government has been cut to the point where there is no reasonable way to reduce spending enough to balance the budget. Those who parrot the phrase “we have a spending problem, not a revenue problem” have repeatedly failed to offer realistic suggestions for further cuts.

The costs of fulfilling our obligation to those enrolled in Medicaid and KPERS continue to increase, and the Kansas Supreme Court has yet to determine whether the $460 million increase in K-12 funding passes constitutional muster. The tax plan passed by the Legislature will generate enough revenue to balance the budget, ensure our public schools have the resources they need and meet the state’s obligation to retirees. It will do all this while keeping taxes lower than they were before Brownback took office. Additionally, it restores important tax credits and deductions which will help offset increased tax liability for many low-income Kansans.

Meanwhile, the governor and his surrogates employ the tactics we’ve sadly come to expect from Washington, D.C., skewing the facts to fit their narrative. They use buzz words like “retroactive,” although they know the Legislature ensured the tax plan would not apply retroactively to wage earners. They call it a $1.2 billion tax increase, more than doubling the estimated revenue the tax plan will generate. They say the Legislature spent every penny, when budget projections point to responsible but not extravagant ending balances. They claim that the legislature created $200 million of new spending but refuse to provide any detail. In contrast, the budget contains only $60 million of new spending, and primarily for a long-overdue state employee pay increase and restoration of funding for Kansas’ mental health system.

Most Kansans would agree those are essential governmental services, and not “pet projects” as one of the governor’s aides recently asserted.

The advocates for the failed Brownback tax plan hope their misleading rhetoric will convince voters to support them as they pursue the same policies Kansans rejected last year. They want to stop us from undoing the damage that has been done.

Much work remains. It took years to get us into such a dire situation, and it will take years for us to recover. I hope you will stand with us, because together we can make tomorrow a brighter day in the great state of Kansas.

Don Hineman is a five-term representative from the 118th district and the Majority Leader of the Kansas House of Representatives.

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