Kansas’ “Recession” Didn’t Cause Budget Problems – Tax Cuts Did

July 27, 2016

A so-called recession at the end of 2015 is being inaccurately blamed by some for state revenues coming in below expectations. Don’t be misled. Our revenue problems occurred a full year before the economic downturn – and the reason was unaffordable and unprecedented tax cuts.

For the latter half of 2015, Kansas saw two consecutive quarters of decline in the state’s economic output. While the technical definition of a recession is not necessarily set to this standard, two quarters of overall economic slowdown in Kansas is certainly not a good thing.

As if on cue, state officials have been blaming a weak economy on Kansas’ huge revenue misses to round out the fiscal year that ended this June 30th, which were off by $76 million in May and over $33 million in June. In normal circumstances, this might be plausible. But Kansas’ revenue problem has not simply just started – we’ve had it for a while.

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In fact, we lost over $726 million in revenue from the tax cuts alone between 2012 and 2014, when the tax policy took full effect. This was almost a full year before Kansas had a “recession” to round out 2015.

You may be wondering how other states in our region fared. The short answer is that it was a mixed bag, with the exception of Oklahoma which has had five consecutive quarters of a slowdown in its economy. Missouri, Colorado, and Arkansas managed to end the year with growth in their economy. Iowa and Nebraska saw a slowdown from the third quarter to the fourth.

What does this tell us? For starters, Kansas wasn’t able to change its economic performance through highly detrimental tax policy changes, despite promises to Kansans that we would reap big economic rewards. If tax cuts were the key to economic success, why did our economy shrink for half of 2015?

These numbers showing an economic dip last year aren’t just numbers. This is what shows up on paper when Kansans have a harder time paying bills, putting food on the table, and making ends meet. At the same time, we’ve seen corresponding reductions in public investments that help our communities thrive. And Kansas’ fiscal irresponsibility only continues to put its future at risk – most recently, the state’s credit rating was downgraded for the third time in two years.

Once again the message is clear: changing the tax cuts to benefit a few wealthy Kansans doesn’t bring prosperity to all of our families and communities.

ClayKansas’ “Recession” Didn’t Cause Budget Problems – Tax Cuts Did