Guest Commentary

Kansas’ finances have come a long way since 2016

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. University Photography, Emporia

Kansas voters who threw far-right Republicans out of office in 2016 and elected Laura Kelly as governor in 2018 should be pleased that the state’s finances are on the mend after facing bankruptcy three short years ago.

In assessing the condition of state finance at the close of the 2019 legislative session, Kansans should not forget the disastrous financial mess of 2016:

  • block grant funding of schools had been ruled unconstitutional;
  • a $700 million state bank account had been drained empty by four years of unbalanced budgets triggering repeated downgrades in state credit;
  • frequent borrowing had ballooned tax-supported state debt to a historic high;
  • a reckless tax experiment bumped up property taxes as a portion of state and local revenue to the highest level since the 1980s;
  • cutbacks in highway maintenance, suspended pension payments, child deaths, prison uprisings and a decertified state hospital highlighted an overall deterioration in state services;

To top off this debacle, far-right Republican lawmakers skipped town in 2016 after authorizing spending that exceeded revenue by more than $300 million.

Most Kansans correctly place primary blame for this mess at the feet of former Gov. Sam Brownback and his tax experiment, but current legislators, including Senate President Susan Wagle, Senate Majority Leader Jim Denning, and House Speaker Ron Ryckman, had a hand in doing the governor’s bidding.

In 2016, Kansas voters rebuked legislative allies of Brownback and elected 40 centrist Republicans and Democrats to contested seats. Then, in 2018, they chose Kelly over Kris Kobach, who wanted to redo the experiment.

A current snapshot of state finance demonstrates that elections do make a difference.

First, and most importantly, a genuinely bipartisan school funding package has been enacted. That package addresses specific issues raised by the Kansas Supreme Court and should end 10 years of turmoil over school finance.

Second, abandonment of the tax experiment in 2017 has restored state balances, estimated at $550 million by July 1, 2020. However, that balance could quickly evaporate if lawmakers fail to keep spending in line with revenue. For example, on the last day of the legislative session, Gov. Kelly, with the help of Democrats and a handful of Republicans, successfully fought off an attempt to override her veto of partisan tax cuts that would have shrunk balances.

Third, axing the experiment has also rebalanced the tax mix among property, sales and income taxes. Relative equivalency among these tax sources should assure lower tax rates overall, reduce competition with other states and promote tax fairness based on income.

Fourth, state legislators enacted a bipartisan budget package that begins to repair state services in a number of areas. Kelly trimmed the package with line-item vetoes but was overridden on those. This action diminished state balances by over $50 million.

Finally, state debt is being paid down from record highs, and state credit has edged upward since 2016.

While state finance is on track, thorny, unresolved issues could throw the recovery off course. Kelly narrowly blocked the Republicans’ tax bill but pledged a comprehensive review of state tax policy in advance of the next legislative session. Kelly proposed extending the payoff of unfunded pension liabilities in order to achieve short-term financial flexibility, but Republicans balked at the cost her proposal. And Senate leaders stalled Medicaid expansion.

Kansans chose a bipartisan path forward in 2016 and 2018, and lawmakers produced. Kelly and legislative leaders now face the dual challenge of keeping on track while also finding consensus on continuing, unsettled issues of state finance.

H. Edward Flentje is professor emeritus at Wichita State University and served with Kansas Governors Bennett and Hayden.
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