June 30, 2017
A new fiscal year begins on Saturday – a milestone that deserves celebration. Because lawmakers boldly set Kansas on the path out of the Brownback tax experiment, Fiscal Year 2018 marks the beginning of our state’s financial recovery. Unlike recent years, Kansas is now better positioned to provide great schools, vibrant communities, and strong services that help residents in need.
Tax reform that passed earlier this month was a crucial first step towards recovery. By reversing the “March to Zero,” closing the LLC loophole, and reinstating a three-tier income tax structure, Senate Bill 30 ends the most harmful provisions of the Governor’s failing tax plan. It also phases in the restoration of an important tax credit and three deductions that were eliminated in 2012 to pay for tax breaks for the wealthy.
With the start of a new fiscal year, Kansas is on its way to restoring its fiscal health and reinvesting in thriving communities. Rebuilding a tax code that works for all Kansans, however, will require additional reforms. This means looking beyond income tax reforms and rebalancing Kansas’ “three-legged stool” by addressing problems with the state’s sales tax and property tax.
To pay for the Governor’s irresponsible and steep income tax cuts, the state increasingly (and disproportionately) depended more and more on these other two sources of revenue. In response to the ongoing budget crisis, the sales tax was increased in 2015 to offset lagging state revenue. This affected every Kansan in every county, but especially hurt low-income residents. And because of the gamble with income tax cuts, state aid to local governments declined sharply. As a result, property taxes shot up as communities struggled to keep up with the demand for basic services. Restoring balance to Kansas’ tax system will require broadening the base and rebuilding tax equity, so that the three components of a strong economy – income tax, sales tax, and property tax – function together.
The Brownback tax experiment not only broke the Kansas budget, but it also broke the state’s tax code. If we want to fully recover from the past five years, tax reform must address sales and property tax problems in addition to income tax issues. Fortunately, Kansans are beginning the new fiscal year with a major piece of the puzzle in place.