Politics & Government

Fact check: Brownback on the Kansas economy

Kansas Governor Sam Brownback at the annual State of the State speech in January. In recent weeks, Gov. Brownback has pushed back on criticism of his economic policies, citing data from the U.S. Bureau of Labor Statistics. But he often paints an incomplete picture.
Kansas Governor Sam Brownback at the annual State of the State speech in January. In recent weeks, Gov. Brownback has pushed back on criticism of his economic policies, citing data from the U.S. Bureau of Labor Statistics. But he often paints an incomplete picture. The Wichita Eagle

Gov. Sam Brownback has pushed back on criticism of his economic policies in recent weeks, citing data to support his statements.

The governor has cited information from such sources as the U.S. Bureau of Labor Statistics in presentations to the Wichita Pachyderm Club, in newsletters to a grassroots e-mail list and in speaking with reporters. But he often paints an incomplete picture of the data.

Critics say the governor’s office selects statistics to make the state’s economy appear better than it is.

Here, The Eagle looks at three statements the governor makes about the economy.

Job growth

What the governor says: The state has gained 64,700 private-sector jobs since Brownback took office in January 2011. He includes this figure in a presentation that he gives to groups around the state to dispute what he calls the myth that his tax plan is failing.

Where he gets it: The U.S. Bureau of Labor Statistics.

What the governor leaves out: Half those jobs were created before Brownback’s tax plan took effect.

The governor’s tax plan took effect in January 2013. The state has gained 32,900 jobs since then, but it was gaining jobs at a faster rate before the tax cut. In the past two years, job growth has slowed considerably.

Brownback promised to create 100,000 new private-sector jobs while campaigning for his second term in 2014. The state is far off pace of that goal. Kansas lost 6,300 private-sector jobs between September 2015 and September 2016, according to the Kansas Department of Labor.

Kansas ranks 45th in private-sector job growth for the last 12 months, according to an analysis by Arizona State University. Colorado leads the region with the 10th highest rate of private-sector job growth, while Missouri and Nebraska rank 31st and 39th respectively. Oklahoma trails Kansas at 47th.

What the governor’s office says: “Three key global markets are dragging down Kansas’ economic growth. Plummeting commodity prices have caused a rural recession,” said Eileen Hawley, the governor’s spokeswoman, in an e-mail. “Decreased oil prices have resulted in a 26% reduction in mining jobs since the tax plan took effect. Manufacturing jobs are down by 8% over the past year, and aviation is Kansas’ most important manufacturing industry.”

What an economist says: Ken Kriz, an economist at Wichita State University, said the job data since the tax cuts went into effect “shows that there really hasn’t been a big impact at all.”

“The way to characterize it over the last year and half is flat, almost nonexistent job growth in Kansas,” Kriz said. “And the other thing you’ll often hear them say is, well, that’s larger stagnation. … However, job growth has not been slow at the national level. It’s actually been fairly buoyant at the national level.”

Taxes

What the governor says: His tax plan has benefited all Kansans because all Kansans saw their income tax rates drop.

Where he gets it: From the rate changes in Brownback’s tax plan.

Before the cuts, Kansans in the top tax bracket, married couples who earned more than $60,000 or individuals who earned more than $30,000, paid a state income tax rate of 6.5 percent. The bottom bracket, couples that earned less than $30,000 or individuals who earned less than $15,000, paid a rate of 3.5 percent.

A middle bracket paid a rate of 6.25 percent.

Under Brownback, the middle and top brackets were combined and saw their rates reduced to 4.9 percent in 2013. Additional cuts reduced the rate to 4.8 percent in 2014 and 4.6 percent in 2015.

The bottom bracket saw its tax rate fall to 3 percent in 2013 and then fall again to 2.7 percent in 2014. It is set to fall to 2.6 percent in 2018.

What the governor leaves out: The state also reduced deductions as part of the tax changes in order to pay for the rate cuts.

Some Kansans paid more in taxes after the governor’s rate cuts went into effect because of that. For example, Kansas’ poorest residents, who make $25,000 a year or less, saw an increase in their taxes after the 2012 law went into effect, according to an Eagle analysis of data from the Kansas Department of Revenue.

The average income tax liability for Kansans in that income range went from -$29 in 2012, the last year under the old rates, to $21.54 in 2013. The average tax liability fell to $9.44 in 2014, a drop from the previous year but a net increase since the rate cuts.

Kansans who make more than $250,000 a year saw the biggest benefit from the tax changes. They saw their average tax liability drop from $32,115 in 2012 to $22,904 in 2014, a 29 percent decrease over two years.

Kansans making between $25,000 and $50,000 by comparison saw their average tax liability drop from $902 in 2012 to $712 in 2014, a 21 percent decrease over two years.

The Legislature made additional tax changes in 2015 in the face of a budget hole, including eliminating income taxes for 380,000 low-income Kansans. It also increased the state sales tax, a change that some analysts say wipes out the savings from the income tax exemption.

What the governor’s office says: “Every single income tax paying Kansan had their income tax liability reduced by the tax cuts,” Hawley said, citing the additional 2015 changes. “This means they have more money in their pocket to spend, invest or save as they see fit.”

What an economist says: Kriz said you have to weigh sales tax increases, which occurred at the state level, and property tax increases, which occurred at the local level amid cuts to state aid, before saying the majority of Kansans have benefited from the tax changes. “Honestly, to look at any one tax source to try and make a claim about the impact of such a big package is really just not serious,” he said.

Business creation

What the governor says: The state had a record 17,298 new business formations in 2015, which he credits to his tax policy.

Where he gets that: This is the number of new business entities that filed paperwork with the Kansas Secretary of State’s Office in 2015.

What the governor leaves out: The state also saw businesses dissolve, withdraw or go into forfeiture during the same period. Those numbers should be included in order to get an accurate number for the state’s net business growth.

When these numbers are added, Kansas saw the total number of businesses increase by 8,577 in 2015.

The number of total business filings also does not give any insight into how many of the entities are businesses with multiple employees versus one-person enterprises.

What the governor’s office says: “When business formations are high, even when there are dissolutions, it is a sign of entrepreneurial confidence in the state’s business climate. This is what we are seeing in Kansas, with five consecutive years of record business formations,” Hawley said in an e-mail.

What an economist says: Kriz said only using the number of new filings is problematic because it overstates the overall number of new businesses. “You’re cherry-picking the data,” Kriz said.

He said economists look at net business creation to gauge the overall economic picture.

“Let’s say that you have 10 businesses that start and 12 businesses that fail. The overall net there is a minus 2,” Kriz said. “And so that isn’t a good sign even though you had 10 new businesses file. It means that either they’re replacing the other businesses or they’re just done in lieu of these other businesses.”

Bryan Lowry: 785-296-3006, @BryanLowry3

  Comments