BEYOND THE NUMBERS
Update, June 7: On June 6, the Kansas legislature, by a bipartisan two-thirds majority, overrode Gov. Brownback’s veto of a bill reversing most of the Brownback tax cuts. We’ve update the timeline below accordingly.
Five years ago this week, Kansas Governor Sam Brownback signed one of the biggest income tax cuts a state has ever enacted, promising that they’d act “like a shot of adrenaline into the heart of the Kansas economy.” Tax cut promoters Art Laffer and Stephen Moore, who helped design the cuts, said they would produce an “immediate and lasting boost” to the state’s economy. Rather than fueling an economic surge, however, the tax cuts have wreaked havoc on Kansas’ budget, as the timeline below shows.
Revenues fell $700 million in the first year and have never recovered, even as the costs of education and other services have risen with inflation and population growth. That’s left the state with a serious budget imbalance, which the governor and lawmakers have tried to paper over by draining operating reserves and raiding the state highway fund at the expense of needed road projects, among other dubious maneuvers.
Consequently, two major bond rating agencies have downgraded Kansas’ bonds, making it more expensive for the state to invest in infrastructure — a cornerstone of a strong future. School funding per pupil remains far below its levels of a decade ago, leading the state’s Supreme Court to rule that schools are unconstitutionally underfunded. And Brownback’s tax changes have widened inequality by raising taxes on low-income families, in part because lawmakers raised the sales tax (which falls harder on the poor and middle class than on the wealthy) to help finance the income tax cuts (which disproportionately benefit the state’s wealthiest residents).
Last year, voters made clear that they’d had enough, electing lawmakers who are much more skeptical about the tax cuts. In February, the new legislature voted to roll back the tax cuts and very nearly overcame the governor’s veto. They’re still negotiating, but Brownback’s tax cuts are very unlikely to survive intact. They’ve been a disaster for Kansas, and they offer a harsh lesson for other states considering deep tax cuts.
Kansas' Tax-Cut Disaster
- Gov. Brownback signs tax cuts
May 22, 2012
- Tax cuts implemented
Jan. 1, 2013
- Revenues fall $700 million
State fiscal year 2013-14 (starts July 1, 2013)
- Moody’s downgrades KS bonds
- Standard & Poor’s downgrades KS bonds
- Gov. cuts school funding
- KS drains operating savings
- Lawmakers jettison school funding formula
- Schools close early in some districts
- Standard & Poor’s downgrades KS bonds again
- State general K-12 aid down 13% since 2008
- Job growth since tax cuts: KS 3.3%; US 8.4%
- Lawmakers vote to roll back tax cuts; Brownback vetoes
- KS Supreme Court: school funding too low
- Budget gap now at least $900 million
- 5th anniversary of signing. Lawmakers looking for solution.
May 22, 2017
- Lawmakers enact bill reversing most of the tax cuts over Brownback veto
June 6, 2017
Senior Vice President for State Fiscal Policy and Co-Leader of the State Fiscal Policy Division