- Policy & Research
- About KHI
Oct. 19, 2012
LAWRENCE A Kansas State University political scientist is warning that the income tax cuts championed by Gov. Sam Brownback are unlikely to benefit the Kansas economy as he and other supporters are predicting.
Joe Aistrup was the keynote speaker Thursday at the Kansas Economic Policy Conference, an annual event held at the University of Kansas. Aistrup said while the cuts in individual tax rates and the phase-out of some business taxes can be counted on to spur investment and job creation, other states — even other countries — could benefit as much or more than Kansas.
“Tax breaks do stimulate economic development, but not necessarily where you want it,” Aistrup said.
He said expecting changes in state tax policy to primarily benefit Kansas is like “Pouring gasoline over your car and hoping that some of it hits the gas tank.”
Other than Brownback, retiring House Speaker Mike O’Neal is perhaps most responsible for pushing the tax-cut bill through the Legislature. As the new president and CEO of the Kansas Chamber, O’Neal said he remains confident the cuts will benefit Kansas small business owners.
“I think the tax proposal was sufficiently targeted that we can have an expectation that it’s going to benefit the people that we want it to benefit,” he said.
Even if the tax cuts produce the nearly 23,000 jobs that Brownback and supporters are predicting, Aistrup said they will reduce revenues and force the state to cut spending. He said spending reductions will be necessary even if a temporary sales tax increase is extended until the benefits of the tax cuts kick in.
“I think the governor knows this,” Aistrup said, suggesting that Brownback and conservatives in the Legislature pushed the tax cuts through for two reasons: to stimulate growth and to create an opportunity to “right size” government.
Official projections indicate the tax cuts will reduce revenues between $4.5 billion and $4.7 billion over five years.
The emerging conservative majority in Kansas is out to change the way government operates, Aistrup said. The moderate Republicans who have traditionally controlled state government with occasional help from Democrats believed in crafting an agenda and then raising the revenue necessary to carry it out, he said. But conservatives decide where they want to draw the line on taxes and then scale government “to fit the revenue,” he said.
The shift in approach is real, O’Neal said, acknowledging that he became more conservative during his 28 years in the Legislature. But he said, so did his constituents.
“It’s not just Sam Brownback coming in and saying ‘this is the way it ought to be,’ it’s the constituents who actually have a vote saying ‘this is the way we want to go,’” O’Neal said.
Aistrup expects the clash of ideologies to result in “large policy conflicts” over education funding and privatizing government services. As an example, he cited Brownback’s decision to contract with three private insurance companies to manage care provided to the 380,000 Kansans enrolled in Medicaid.
Sen. Jeff King, R-Independence, briefed conference attendees on Project 17, an initiative aimed at revitalizing southeast Kansas. He said the effort to build a “regional economy” in one of the poorest parts of the state by convincing leaders in 17 participating counties to stop competing and start cooperating was off to a promising start. In large part, he said, that was due to unique grant awarded to project organizers by the Kansas Leadership Center. The center will provide $1 million worth of leadership training to southeast Kansas residents involved in the project.
“We are embarking on what is undoubtedly the largest leadership training initiative in the history of Kansas,” King said, noting that more effective leadership will be the “single most important factor” in the project’s success.
The project steering committee hoped to hire an executive director before the end of the year and begin the leadership training by February, King said.
The KHI News Service is an editorially independent initiative of the Kansas Health Institute and is committed to timely, objective and in-depth coverage of health issues and the policy making environment. Find more about the News Service at khi.org/newsservice or contact us at (785) 783-2529.