Politics & Government

Can the governor make Kansas and Wichita grow faster?

Bureau of Economic Analysis
Bureau of Economic Analysis BEA

The Kansas economy shrank last year — one of the worst performing states in the nation.

The candidates running for governor promise they will take action to accelerate growth.

From cutting taxes to spending more on transportation, the candidates laid out their ideas for boosting growth during a recent Kansas Chamber of Commerce forum. They acknowledged that the state’s economy is struggling but offered ambitious plans to turn things around.

But just how much power does the next governor actually have to make a difference?

“In the short run, the answer to me is not a whole lot,” because the things that affect the state's economy positively work only over a long time span, said Kenneth Kriz, an economist at the University of Illinois who until recently was at Wichita State University.

Both the Kansas Policy Institute and the Kansas Center for Economic Growth said the governor can play an important role in shaping the state's economy. But each added that the governor does not work alone — he or she needs the Legislature's help.

The shadow of former Gov. Sam Brownback's 2012 tax cuts hangs over the organizations' views of the governor's ability to shift the economy. Last year, lawmakers overrode Brownback's veto to largely repeal the tax cuts.

"The appointees he puts in place, such as the budget director, can direct how the government spends money and encourage growth across the board," said Heidi Holliday, director of the Kansas Center for Economic Growth. "The experience that Kansas had under the Brownback administration surely shows how the state’s chief executive can harm longstanding priorities, damage our credit and shortchange students."

Kansas Policy Institute President Dave Trabert said the problem with the 2012 tax cuts was that leaders did not control spending while cutting taxes.

A governor can provide that kind of leadership, Trabert said.

“This is what a governor can do, is take the lead and show legislators and citizens how we’re going to get wherever we want to go," Trabert said.

Kriz downplayed the effects of tax cuts on a state's economy, calling them a “blip.” Added spending, especially in infrastructure, can have an effect over several years. Improving education also helps, he said.

A governor can help set a state up to have a better economy, but actual progress takes a long time, he indicated.

“It’s so much easier to go for what I would call the cocaine model and try and start some tax cuts and get a short-term high versus creating a better business environment through having more qualified workers and having better infrastructure” but then having to wait five to 10 years to see results, Kriz said.

Government can't tax and spend its way to prosperity, Trabert said. He said talk of "investing" in programs or areas is code for more spending.

Kansas growth slow

Although the financial situation of state government has improved over the past year, Kansas’ overall economy remains sluggish amid a nationwide growth streak that has lasted years. In 2017, the state’s gross domestic product — a fundamental economic measure — shrank 0.1 percent, according to the U.S. Bureau of Economic Analysis.

Kansas was one of just three states that saw their economies shrink, along with Connecticut and Louisiana.

There is indication that Kansas’ economy picked up in the last part of the year, however. In the last three months of 2017, the gross domestic product grew by 2.3 percent.

But the state is also saddled with significant numbers of people leaving. While the Kansas population is growing, it is growing at a much slower pace than the rest of the country.

Between 2010 and 2017, the Kansas population grew 2.1 percent, compared with 5.4 percent for the nation as a whole, according to the U.S. Census Bureau.

Wichita’s economic challenges are even more pronounced. The city’s gross domestic product has fallen 1 percent since 2010, while GDP has increased 16 percent nationally. Every other comparative city in the Midwest saw growth, while Wichita declined.

The candidates' plans

Several candidates for governor have similar ideas for how to improve growth.

Many talk about education and the need for a qualified workforce. Independent Greg Orman has called for the creation of a revolving loan fund that would aid students seeking training certificates.

“We’ve got all sorts of dollars available if someone wants a four-year degree, if someone wants a two-year degree, but we have limited dollars available for kids going into certificate programs,” Orman said.

Republican Insurance Commissioner Ken Selzer said school districts need to focus on the economic needs of their communities and deliver educated people with the skills needed locally. “We have to have public-private partnerships” in education and job training, he said.

Republican Gov. Jeff Colyer said Kansas has provided additional technical education funding under his watch, and that he pushed for additional funding for aviation-related training in Wichita, which he said was requested by Spirit AeroSystems. The company said in December it will add 1,000 jobs in Wichita.

Colyer has also created the Governor’s Education Council in an effort to connect educators and business leaders.

“We’re changing how we train people,” Colyer said.

Some candidates said they would cut or restrain spending and try to keep taxes low. Republican Secretary of State Kris Kobach, who supports reinstating the 2012 tax cuts, said Kansas “put the cart before the horse” by not cutting spending when the tax cuts were put into effect.

He also criticized Kansas lawmakers for not returning to taxpayers a "windfall" of about $194 million over three years caused by federal tax law changes.

“The nation’s economy is having a massive rebound and the Trump tax cut is helping companies and individuals all across the land, yet here in Kansas we’re moving in the opposite direction,” Kobach said.

Orman and Democrat Josh Svaty said Kansas could expand its ability to serve as a distribution hub for businesses. Kansas’ location in the geographic center of the country should make the state the “distribution capital” of America, Orman said.

Both candidates have expressed a desire to make Kansas more attractive for intermodal transportation — the ability to move freight from one form of transportation to another without actually handling the freight. An example of intermodal transportation is a shipping container that may be hauled by a train and then by a truck.

“We need to be thinking about what’s the next intermodal project that can fundamentally redo the way we move products around the state,” Svaty said.

Democratic Sen. Laura Kelly has proposed bringing back the Kansas Bioscience Authority. The state formed the organization in 2004 as a way to promote the bioscience industry in Kansas. Its investment portfolio was sold off in 2016 for $14 million amid a tight state budget.

Along with other candidates, she also emphasized the need for transportation investment.

“We have got to make sure we have four lane highways going into all of rural population areas because otherwise companies won’t even look at the possibility of going into those particular areas,” Kelly said.

Republican Jim Barnett, a former state senator, said it's important for Kansas to use a regional approach that recognizes the importance of local control. "What is needed in Garden City may not be needed in Olathe," his campaign says.

Like other candidates, Barnett also wants the state's educational system and business community to partner to produce workers with the skills businesses need.

Democrat Carl Brewer, former Wichita mayor, has said the state must be supported by a quality education system and that the state's agricultural, energy and manufacturing sectors must all interact with the global marketplace.

Patience required?

Voters will ultimately decide what candidate – and economic approach – they prefer.

Candidates will face political pressure to promise more spending, KPI's Trabert said. One of the best ways to get re-elected, he said, is to promise to spend more.

“It takes political courage (to) stand up to people who are going to say investing is the way to go. Investing is a code word for we just want to spend more," Trabert said.

For Holliday, at KCEG, the key to economic growth "rests in the state pursuing balanced tax and budget policy, investing in shared priorities that help all Kansans thrive." She mentioned child care assistance that allows parents to maintain jobs, nutrition programs that put food on the table and programs that educate young children to build the workforce of the future.

Regardless of who is elected, it will take time for the governor’s economic agenda to make a difference in the Kansas economy, Kriz said. Investments in transportation and education will not change the situation overnight.

“That presents the old problem of: Is anybody patient enough to try that experiment and wait for it to happen?” Kriz said.

Contributing: Stan Finger

Jonathan Shorman: 785-296-3006, @jonshorman