June 8, 2017
Kansas is in a fiscal crisis. Lawmakers have to close an over $300 million deficit by this month. Infrastructure spending has been put on hold, the state’s Supreme Court has ruled that public schools aren’t being equitably funded, and the failure to expand Medicaid has hurt vulnerable Kansans and cost the state billions.
All of these factors served as a wake-up call to state lawmakers, who have finally turned on Gov. Sam Brownback (R) and rejected his economic policies. On Tuesday night, a coalition of Kansas lawmakers — conservatives, moderate Republicans, and Democrats — rolled back tax cuts that haven’t delivered on the promise of stimulating the state economy. Kansas will raise taxes $1.2 billion over the next couple years to cover its deficit.
Although the repudiation of Brownback’s tax cut experiment from members of his own party was dramatic, especially to outsiders, Kansans aren’t surprised. The rejection of his trickle-down economic policies has been brewing for years.
The harmful consequences of a bad tax policy
In 2012, Gov. Brownback cut personal income tax rates, got rid of the top tax bracket, lowered the sales tax, and eliminated non-wage income taxes for small businesses. He said he wanted to make the state part of a “real-live experiment” to see how conservative policies would work. But since his policies took effect, the state has been battling challenges on multiple fronts.
The employment rate in Kansas grew by only 2.6 percent — significantly smaller than the average 6.5 percent growth nationally in the same period of time. The state’s economy has also grown less than half as fast as the rest of the country, according to the Center for Budget and Policy Priorities. Taxpayers in the bottom 40 percent experienced an increase in their taxes, according to an analysis by the Institute on Taxation and Economic Policy.
“When the 2012 tax plan was passed, we were told it would be a shot of adrenaline into the heart of the Kansas economy, and instead we’ve seen the opposite happen,” said Heidi Holliday, executive director of Kansas Center for Economic Growth.
Kansas’ General Fund shrunk from over $700 million in 2013 to $40 million in 2016, and the state’s bond rating has been downgraded twice. Infrastructure projects have been put on hold. Per-pupil aid for public schools fell during Brownback’s tenure, and the state’s Supreme Court ruled that Kansas failed to abide by the state constitution’s requirement to provide equitable funding for school districts.
In addition to the governor’s sweeping tax cuts, health care advocates said his failure to expand Medicaid has cost the state billions and his decision to privatize the state’s Medicaid system has harmed the quality of care Kansans receive.
Brownback vetoed Medicaid expansion again earlier this year. His spokeswoman, Melika Willoughby, told The Atlantic, “Kansas must prioritize the care and service of vulnerable Kansans, addressing their health-care needs in a sustainable way, not expanding a failing entitlement program to able-bodied adults.”
David Jordan, executive director of Alliance for a Healthy Kansas, a statewide coalition of health care industry and health advocacy groups, said Brownback’s actions have seriously threatened Kansans’ health — especially the reductions in reimbursement rates for providers accepting Medicaid patients, the lack of oversight for the state’s Medicaid system, and the decision not to expand Medicaid.
“Over the last year five years, the governor has systematically harmed the state’s safety net, threatening the health of our most vulnerable Kansans through the privatization of state’s Medicaid program and lack of transparency and accountability in the oversight of the state Medicaid program,” Jordan said.
Before President Trump was sworn into office, Centers for Medicare and Medicaid Services officials said Kansas was out of compliance with federal statutes and regulations, that communication from the state to the public was “adversarial” and that there was less oversight from the state. Thus, officials rejected the state’s request to extend its program.
How the tide turned against Brownback
All of these factors and more proved to lawmakers that the tax cuts weren’t sustainable and that the only option was to reject them, local experts on tax policy said. The state’s Supreme Court ruling on school funding in particular ensured that many state lawmakers wouldn’t have the political wiggle room to keep tax cuts.
“A lot of education groups were mobilized by the Supreme Court ruling this spring, and that we would need revenue to pay for any school finance formula that moves forward,” Holliday said. “That really increased the urgency of the tax reform efforts that were there already in Kansas.”
A few factors likely played into Republican legislators’ decisions to finally oppose the tax cuts: the urgency of the state deficit, the presence of more moderate Republican lawmakers in office after the last election, the school funding decision, and the governor’s waning influence in the legislature. Mark Peterson, a political science professor at Washburn University, said there wasn’t time to do anything else given the fact that the state was running out of money.
“When the governor gave his veto message there was a general recognition that he had no compromises or offers that made sense. The die-hard ‘We don’t have a revenue problem. We have a spending problem.’ crowd wasn’t gaining any new public or legislative supporters,” Peterson told ThinkProgress over email. “So a few of the less conservative members of the most conservative Republicans in the House and Senate gave it up, held their noses and cast the necessary two to four votes in each chamber to provide the two/thirds override votes necessary to quash the governor’s veto. There wasn’t time or will to do anything as an alternative.”
“The die-hard ‘We don’t have a revenue problem. We have a spending problem.’ crowd wasn’t gaining any new public or legislative supporters.”
Burdett Loomis, political science professor at the University of Kansas, said voters began to react to Brownback’s policies a few years ago.
Although Brownback was reelected in 2014, there was heavy criticism of his tax cuts and he had an approval rating under 50 percent. Loomis said rather than a wave of popular support, Brownback’s win may have been due to an influx of money coming into the state to support Sen. Pat Roberts (R-KS), who was on shaky ground that election year. Outside groups spent $10 million on ads for Roberts and against his opponent, and both Roberts and Brownback won the election that year. But in 2016, the same year that the governor’s approval rating fell to 26 percent, a number of moderate Republicans defeated incumbent conservatives, which served as a rebuke of the governor’s policies.
“[The Roberts campaign] nationalized the election and made it more Republican than the electorate, so I think Brownback benefited from that,” Loomis said. “There was handwriting on the wall then, and by 2015 and 2016, the state of the economy and state of the government were so bad that average people were really getting it. It was a reaction to Brownback’s policies, but it just took a while. This is a Republican state. It took a while for that to sink in, but it did sink in and the 2016 election demonstrated that.”
What lies ahead for the Kansas economy
The future of the state’s Medicaid, school funding, and financial footing still haven’t been settled. The governor has not confirmed whether or not he will sign a bill to increase public school spending by $300 million, and it’s unclear if that funding will even comply with the Kansas Supreme Court’s ruling. A number of spending cuts, made over the years due to the tax cuts, also need to be restored — especially in areas like the state highway fund. An almost $100 million payment to the Kansas Public Employees Retirement has been delayed.
“Last night’s vote was phenomenal for our state, but it’s only a first step. There is a lot of damage that needs to be repaired in our state,” Holliday said. “We’ve gone through nine rounds of budget cuts since the Brownback tax plan took effect, and lawmakers agreed that there was nothing left to cut from the budget. But we do have a lot of pieces of the budget that have been underfunded for years that need reinvestment.”
Loomis said he doesn’t see Kansas ever becoming a purple state, but that he thinks the political environment has changed from one where conservatives didn’t need to work with Democrats and moderate Republicans or hold hearings.
“I don’t think [Kansas] will become a purple state at all, but we may have moved toward pink from red,” Loomis said. “I think this kind of package reflects where the Kansas government has been over the last 40 years, where Democratic governors have often worked with Republican legislatures or moderate Republican governors worked with Republican legislatures to produce a government that wasn’t excessive but certainly funded governmental services.”
Meanwhile, Brownback has gotten his bailout. He’s likely to leave his post — and the disaster he created in Kansas — for a comfortable job in Rome as UN ambassador for food and agriculture.
Read more from ThinkProgress here.