September 19, 2016
A former Kansas budget director isn’t happy with how the Kansas tax experiment has turned out.
Duane Goossen, who was the state’s budget director for 12 years under three governors, spoke in McPherson Thursday evening about the state of Kansas’ budget, and what he believes to be a failure of income tax reductions intended to stimulate the state economy.
“At a normal time, the state budget would not be a hot topic, but this isn’t a normal time,” he said. “More and more, Kansans are waking up and understanding that something has gone wrong.”
Goossen has long criticized the outcome of income tax cuts enacted in Kansas, including the exemption of 330,000 small businesses like limited liability corporations, self-employed individuals and farms. He said these cuts have resulted in massive budget shortfalls that have forced Kansas to cut programs, increase sales and other taxes, and borrow money from other government funds to maintain a balanced budget.
“People outside Kansas have been watching to see what happens here,” he said. “They have a sense that something is not good, and that Kansas is not the state to follow.”
Goossen said the income tax cuts have resulted in an unbalanced state budget, despite promises that economic gains would make up for lost income tax revenue. The state’s constitution requires a balanced budget.
“The big deal, the basic thing, the rule, if you will, is simple: Income has to, or should, equal or exceed expenses,” Goossen said. “Is the same rule that governs our bank accounts. If you don’t have money there, you can’t pull any out.”
Goossen said when people talk about the state budget, they usually mean the state’s general fund. Traditionally, this fund collects revenue from income taxes and sales taxes, as well as a few other sources, and pays for programs like public education, Medicaid and human services.
The state also has a highway fund, which uses fuel taxes, vehicle registration fees and sales taxes to fund highway maintenance and construction. Other funds exist for specific programs, such as collecting college tuition to operate state universities.
Income tax cuts resulted in lower revenue into the general fund. As a result, Goossen said, the state has had to make cuts to education, Medicaid and other services, increase sales and tobacco taxes, and borrow money from highway and other funds and cash reserves to balance the budget each year.
“Even after they cut expenses and raised taxes, it was still unbalanced,” he said. “There are bills from the previous fiscal year that the state had to delay paying, because they couldn’t afford to do it.”
Goossen said the cuts have had a negative effect on public education and medical services, which have to deal with rising costs on lower state funding or reimbursements. He also said state employees have not received raises in eight years, and that Kansas is having trouble filling vacant positions as a result.
“We’re just scraping by day to day,” he said. “It was supposed to boom the economy, but what we’re clearly seeing is a badly damaged budget.”
Goossen said compared to neighboring states, Kansas’ economic growth has been sluggish. And, to top it off, many Kansans have seen an effective tax increase as a result of tax hikes in other areas.
“The bottom 40 percent of Kansas earners saw a tax increase, even with the 2012 tax cuts,” he said. “We can’t go into the future like that. We can’t stop this downward spiral if we don’t change. It seems logical to me to go to the source of the problem, what started it all, and fix it there.”
Read more from the McPherson Sentinel here.