Tax cuts passed by the Legislature during Gov. Sam Brownback’s first term will cost the state about $5 billion over seven years, according to a memo from the Kansas Legislative Research Department.
That number is not new, but it’s a reminder of the cost of cutting taxes as lawmakers prepare to face a $648 million deficit for next year.
The memo, which was reviewed by the House Appropriations Committee on Tuesday, shows the combined impact of a 2012 bill that reduced income tax rates and eliminated them for certain businesses and a 2013 bill that included some measures to partially offset the tax cuts.
The cumulative impact is a $4.99 billion loss for fiscal year 2013 through fiscal year 2019.
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During that period, the state will take in $6.8 billion less in income tax revenue than it would have had it not passed the tax cuts. Changes to the severance tax included in the 2012 bill amount to an additional $433 million, and the sales tax bill Brownback signed the following year generates an additional $1.37 billion, not enough to offset the impact of the tax cuts.
“It was anticipated all along,” Mark Tallman, associate executive director of the Kansas Association of School Boards, said when asked his thoughts on the numbers. “All the projections showed there would be a substantial reduction in revenue. I mean, that was the point.”
Still, many lawmakers have been caught by surprise by the projected shortfall for next year’s budget. They also must pass a bill to approve the governor’s initial fixes for the current year’s budget hole of $280 million.
Additional income tax reductions that went into effect Jan. 1 stand to cost the state $153 million this year.
Republican lawmakers say they don’t want to repeal the tax cuts, but they may tinker with the tax code.
“We will look at all options,” said Rep. Ron Ryckman Jr., R-Olathe, the appropriations chairman.
Lawmakers are also scrutinizing the cost of K-12 education. At the same meeting, Rep. Jerry Lunn, R-Overland Park, noted that the state’s current school finance formula allocates aid as though the state has more students than it actually does.
The state has about 459,700 public school students, but the school finance formula allots aid as though there were more than 680,000, according to the Legislative Research Department. That’s because weightings, which address districts’ needs based on transportation costs or number of low-income students, inflate the number used to calculate state aid.
Several Brownback administration officials have said in recent weeks that current education spending levels are unsustainable.
Tallman disagrees. He said that Kansas’ spending on education has declined in recent years in proportion to total personal income.
“As a part of our economy, what we’re spending on education has been declining. Not increasing. So what we’re spending on education is only unsustainable if our revenues continue to shrink,” Tallman said.