Before they push hard for tax cuts, Republican legislators would be wise to remember the mistakes that cost the party the governors office.
Last week, newly inaugurated Gov. Laura Kelly outlined her proposed budget for the 2020 fiscal year. Kelly pushed for increased public education funding, expanded Medicaid and pay raises for state employees. She proposed refinancing the states pension debt over 30 years. Kellys $18.4 billion budget is the states largest ever.
What Kelly did not include in her budget was income tax relief, a major initiative for Republicans, who control the House and Senate by overwhelming margins. Republicans want to return to residents some of the excess tax revenue that has accumulated since lawmakers overhauled the states tax policies.
So far in fiscal year 2019, tax revenue has exceeded 2018 revenues by $195.73 million. And Kellys budget projects that the state will have cash reserves of $686 million at the end of the 2020 fiscal year. Kellys budget director, Larry Campbell, said the cash reserves were a hedge against an economic downturn.
Campbell is right. Not that long ago the end of the 2016 fiscal year Kansas had just $35 million in reserves, the equivalent of enough money to keep the government running for just two days. It was the smallest cash reserve of any state in the nation, according to a Pew Charitable Trusts report.
The fiscal issues were the direct result of tax cuts implemented by Gov. Sam Brownback and conservative legislators in 2012 and 2013. Brownback argued the cuts would stimulate the economy, spurring job growth and consumer spending. Instead, the economy stagnated and the state suffered declines in tax revenues month after month after month.
The cuts became the albatross that dragged down Brownbacks tenure as governor. Legislators finally repealed the tax cuts in 2017, but only after a coalition of Democrats and moderate Republicans voted to override a Brownback veto.
Any notion that Kansans longed to return to the Brownback strategy were put to rest during the 2018 election. Kris Kobach ran on just such a platform, even arguing that Brownback didnt go far enough. Kobachs vision wasnt well received and Kelly, a former state senator, won going away.
The state of Kansas remains under court order to fund K-12 education at a higher level. Lawmakers have plundered the states highway funds to pay for other initiatives. Even with the excesses, there remain areas of state government that need more help.
Campbell argued that lawmakers should wait up to three years, allowing tax revenues to stabilize, before implementing new cuts.
Implementing tax cuts now would expose the state budget to significant risk and threaten the economic improvement that has been experienced the past two years. Republican lawmakers would be wise to remember that this debate was the central focus of the 2018 gubernatorial campaign and, in the end, voters chose Kellys vision for the state.
