A look at Gov. Brownback’s economic claims

07/10/2014 6:28 PM

08/08/2014 10:25 AM

The Kansas City Star examined a handful of the Kansas governor’s statements related to his unprecedented reworking of the state government’s approach to economic issues. We checked those claims against the record.

On May 29, Kansas Gov. Sam Brownback passionately defended his economic policies in a speech to conservatives at the Heritage Foundation think tank in Washington.

“Day one, when I entered office, I was handed a projection that if we did nothing as a state, we would have a $500 million deficit at the end of that fiscal year in six months,” Brownback said.

A casual listener – or voter – might conclude Brownback faced a $500 million budget shortfall in June 2011, six months after he took office.

He did not.

According to documents provided by his Department of Revenue, Brownback was actually told on “day one” that he faced a deficit of just $60 million in six months.

A $492 million deficit was predicted for 18 months later – June 30, 2012, the end of the 2012 fiscal year. The end of the federal stimulus program caused a cash crunch in Kansas and most other states.

On July 2, Brownback clarified his statement in an e-mail to The Star.

“After taking office in January 2011, I was presented with an FY 2012 budget which … had a projected deficit of $500 million if the administration took no action,” he said, a much clearer description of what actually happened.

Politicians often exaggerate statistics, cherry-picking facts and figures to bolster their policy choices. Rep. Paul Davis, Brownback’s Democratic opponent for governor, for example, inflated teacher layoffs in Kansas. After a round of sharp criticism, he stopped making the claim.

But Brownback’s extensive comments supporting his dramatic fiscal efforts in Kansas have attracted intense scrutiny of the state’s financial performance.

Articles and commentary in the New York Times, the Wall Street Journal, Bloomberg Businessweek, Forbes, U.S. News, Esquire, Politico, the Huffington Post and Washington Monthly have all examined the Republican’s budget policies. So have academics.

Brownback does not object to such a review.

“You run on a series of numbers that are measurable,” he told a conference sponsored by Politico in February.

Those measurements are underway.

“It’s entirely fair and appropriate to hold Gov. Brownback accountable,” said an e-mail from Nick Johnson of the Center on Budget and Policy Priorities, a group that sharply attacked the Brownback budget. “The kinds of claims that he made were just begging to be evaluated.”

Claims examined

The Kansas City Star examined a handful of Brownback claims related to his unprecedented reworking of the state government’s approach to economic issues. We checked those claims against the record.

Claim:We cut taxes – income, sales, and property.” – May 2014

Partially true. Brownback and the Kansas Legislature did cut income taxes, including reducing the overall rates and exempting some business income from any state taxes at all.

But the other taxes are more complicated.

Sales taxes have indeed dropped since Brownback took office. They are higher than they would have been, though, had he and the Legislature done nothing.

Part of the 2010 sales tax increase Brownback used to help balance the budget was supposed to end in 2013. Instead, last year the governor signed a bill extending the sales tax at a slightly reduced rate.

From the current law baseline when he took office, then, Brownback technically raised state sales taxes.

Brownback also claims to have cut property taxes as part of the school finance law passed this winter.

But many local taxpayers have paid higher bills because of higher property values, higher local levies or both.

In March, the Brownback administration said state and local governments in Kansas had collected $4.1 billion in property taxes in the previous fiscal year, $300 million more than the year before Brownback became governor.

“Property taxes under my administration have, in fact, risen at a slower rate than under the previous administration,” the governor said in an e-mail when asked about the issue.

How much in the bank?

Claim:When I came into the governorship in the State of Kansas, we had $876.05 in the bank account.” – March 2014

Incorrect. The $876.05 figure represents the reported ending general fund balance June 30, 2010, six months before he took office.

In a speech at the conservative New York Meeting conference, Brownback made the original claim – then clarified it. Budget officials told him “that’s what we ended the last year with,” he recalled.

But government accounting can be much more complicated than your checkbook. The state’s Comprehensive Annual Financial Report, or CAFR, actually shows an all-funds ending balance of $163.4 million in Kansas government as of June 30, 2010.

Claim: “We ended two fiscal years later, thanks to the great legislature we’ve got, nearly half a billion dollars cash on hand. And that’s with cutting taxes during that period of time.” – May 2013

Partially accurate. The general fund balance at the end of FY 2012 was $503 million, according to the Kansas Legislative Research Department.

And the Legislature did cut taxes that fiscal year. But those tax cuts didn’t go into effect until January 2013, six months after the 2012 fiscal year ended.

The governor’s office says Brownback did not mean to imply the tax cuts were responsible for the $500 million fund balance. His statement, the office said, was simply meant to point out the two events happened at the same time.

Level spending

Claim:We’ve leveled that line off in state spending.” – May 2014

Misleading. The state’s general fund spent $5.3 billion in fiscal year 2010. In fiscal year 2014, it spent almost $6 billion, an increase of $700 million during Brownback’s first term.

Projected general fund spending in fiscal year 2015, which just started, is $6.3 billion. That’s $1 billion more than the fiscal year before Brownback took office.

Brownback’s office says he is referring to all funds, not just the general fund. On that basis, though, the claim also misleads. The CAFR shows total government spending at $12.2 billion for fiscal year 2010. In fiscal year 2013, the state spent $12.8 billion.

Claim: “We’re at record levels of employment in the state.” – May 2014

Partially accurate. Federal job estimates for the state are based on various methodologies and can be confusing and contradictory.

The local area unemployment survey from the Bureau of Labor Statistics, for example, shows 1,427,872 people were employed in Kansas in May 2014, a record.

But a different BLS survey shows 1,383,300 nonfarm salary and wage occupations in Kansas in May. In May 2008, the same survey showed 1,396,900 jobs.

In any case, job growth in Kansas still lags behind most neighboring states and the nation as a whole, at least according to most measures. Job growth is a key promise of the Brownback economic approach.

Kansas jobs grew at a 1.1 percent rate over the past year, according to one BLS survey. Jobs grew at a 3 percent rate in Colorado in the same period. Oklahoma grew jobs at a 1.7 percent rate and Missouri at 1.5 percent. Nebraska jobs grew at a 0.9 percent rate.

In June, the Bureau of Economic Analysis said the Kansas economy grew 1.9 percent in 2013, the first full year of the Brownback tax cuts. In Colorado, the growth rate was twice as high – 3.8 percent.

Growth in Nebraska and Oklahoma was also higher than in Kansas.

Missouri’s growth, at 0.8 percent, lagged behind, the bureau said.

Claim:We’ve invested more money in our K-12 schools.” – May 2014

Incomplete and therefore misleading.

In fiscal year 2009 – the last fiscal year before the recession and before federal stimulus spending began – Kansas spent $4,400 in base state aid per pupil. Next year it will spend $3,852 per student.

But taxpayers spend more on schools than just the basic per-pupil rate. Brownback argues that when all state aid for education is counted, the total state investment per pupil in fiscal year 2015 will be $7,175. That’s $10 per pupil more than fiscal year 2009.

Brownback’s additional school spending can be almost completely attributed to increased contributions to the state’s pension system and capital improvement aid for districts, not on teacher salaries, books or other operational costs.

When pension spending and capital aid are subtracted, state support for Kansas schools was roughly $100 million higher in fiscal year 2009 than in fiscal year 2014.

To be fair, school spending in Kansas began to dip in fiscal year 2010, the year before Brownback took office. The impact of that slump was reduced that year, though, because of federal education stimulus spending in the state.

Claim: The Kansas poverty level has been “flat” during the current administration. – March 2014

This claim depends on the definition of “flat” and the definition of poverty.

Census Bureau figures show poverty in Kansas grew during the first two years of the Brownback administration.

In 2010, the year before Brownback took office, 13.6 percent of Kansans were living below the poverty level. In 2012, 14 percent of Kansans lived below the poverty level, the highest percentage since at least 2008.

Figures for 2013 are not yet available. In an email, Brownback’s office said the poverty claim is related to poverty for children, not the overall rate.

Brownback’s office points to data showing the percentage of children living in poverty was essentially flat in 2011 and 2012, although the actual number of those children grew by about 1,000.

In a March speech when he was asked about the state’s poverty level, Brownback conceded that he had not made a lot of progress on the problem of child poverty.

“We really haven’t had enough time to get at that issue,” he said. “We’ve really got to do a lot more work in that area.”

Claim: “We are not going to cut anybody off of Medicaid. Nobody will be cut off of Medicaid. We are not cutting provider benefits.” – October 2012

The claim is incomplete. Some people are getting less coverage from Medicaid than before, while a larger number of people have seen increases by KanCare, the state’s Medicaid overhaul.

The companies that manage care for the program – Amerigroup, Sunflower State Health Plan and UnitedHealthcare – reduced services last year for about 1,300 people receiving home and community-based services.

Brownback administration officials say those reductions should be balanced against additional services for some patients and a reduced waiting list. Today, roughly 3,200 Kansans are getting more services under Medicaid than were provided previously. KanCare is providing more services than before, such as heart transplants and bariatric surgery, a spokeswoman said.

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