Brownback challenger treading lightly on Kansas taxes
07/15/2014 4:47 PM
08/08/2014 10:24 AM
He sees them as a failed ideological experiment that is bleeding state government while endangering public education and many other services.
Ask him what he would do about those tax cuts if he’s elected, and Davis’ answer is softer, more ambiguous.
“Right now, I’m just spending a lot of time talking to business leaders and community leaders about how they believe we ought to grow the economy,” the state representative from Lawrence said last week.
As the governor’s race gets into full swing, Davis faces tough questions about those tax cuts: Would he repeal them? Chop the budget? Split the difference by delaying cuts scheduled to phase in over the next several years?
Political analysts say Davis’ tone reflects his electoral bind. Leaving the tax cuts in place would undercut his criticism of the incumbent. Reversing them would make him vulnerable to charges of raising taxes.
And suddenly shifting tax rates up and down could signal to investors that the Kansas business climate is too hard to predict.
“It looks pretty close to a no-win,” said Chapman Rackaway, a professor of political science at Fort Hays State University. “It’s a huge dilemma.”
That may be why Davis – for now, at least – won’t say what he would do about the Brownback income tax cuts.
“Most political consultants at this point would be advising him to avoid answering that question,” said Michael Smith, a professor of political science at Emporia State University. “It doesn’t have easy answers.”
Davis turns the issue immediately to Brownback. He said the governor is responsible for the approaching budget storm created by the tax cuts.
The state is burning through hundreds of million of dollars in cash reserves and could be in the red by as early as next year. Voters want to hear what the candidates will do to make the economy grow, Davis said.
“What they’ve seen from the Brownback plan is something that is clearly not working,” he said.
The Brownback campaign is quick to label Davis a tax-and-spend liberal.
“The only Paul Davis tax plans we’ve seen are the tax increases he voted for in the past,” said Mark Dugan, Brownback’s campaign manager.
Dugan points out that Davis this year could have voted for an amendment – criticized at the time as political gamesmanship – to repeal the tax cuts. The amendment was rejected unanimously in the House.
A spokesman for Davis said the amendment was nothing more than election-year “political theater.”
“This isn’t a game,” spokesman Chris Pumpelly wrote in an e-mail. “Paul is committed to finding common-sense solutions to the problems facing our state.”
Rackaway said Davis can’t win the race by being “Dr. No” – a candidate who opposes everything Brownback supports.
Davis has said he will roll out specific plans later in the campaign, although he has already given some hints.
In April, Davis told the Pittsburg Morning Sun that he wanted to shift the “tax conversation” to property taxes.
Davis pointed out that two years ago he had a plan to use surplus state revenue for property tax relief. The plan died in the Republican-controlled Legislature.
Some strategists said it makes sense for Davis to bide his time before getting too specific on taxes. Voters aren’t focused on the race, and Davis doesn’t want to give Brownback months to hammer away at a proposal. In the meantime, Brownback has a primary opponent, Jennifer Winn of Wichita.
“Right now, Brownback’s on the defensive. Why take away the spotlight from that?” said Bob Beatty, a political science professor at Washburn University.
Eventually, Davis will have to take on the tax cuts, political experts say.
If Davis decides he wants to repeal the cuts, he would have to persuade a Legislature controlled by conservative Republicans who favor the current tax policy.
Then there’s a larger question of what message radically changing the state’s tax structure would send to businesses so soon after cuts were enacted.
“That would never be considered a positive note by business in general,” said Mike Mullis, president of J.M. Mullis Inc., a Memphis, Tenn.-based business location consultant. “It’s sending a mixed signal about long-term business cost stability.”
Mullis said businesses look at their costs spanning 20 years based partly on state laws and regulations. He said political debate calling for reforms can influence how a state is measured for a potential business site.
“What businesses want is stability to do whatever they can to decrease risk,” said Adam Bruns, the managing editor of Site Selection Magazine, an economic development trade publication. “Anything that’s a dramatic change would certainly risk being a red flag to a corporate prospect.”
Others think reversing the tax policy might scare off some businesses in the short term but probably wouldn’t do any long-term damage to the state’s ability to recruit.
“You certainly run the initial risk of whatever business interest there was to move to Kansas because of those low taxes suddenly running away like they’re on fire,” said Chris Kuehl, an economist with Armada Intelligence in Kansas City.
Kuehl said that while that might sting for a few years, businesses know they are always one election away from new policies.
Kuehl said he wouldn’t expect Kansas to become an economic development pariah if the Brownback tax cuts were canceled.
“We have seen so many states in the country make radical shifts from one policy to the next,” Kuehl said. “Companies kind of get used to that whiplash. They’re not surprised by it.”