April 25, 2017
Former state budget director Duane Goossen urged a Hutchinson audience – others watching a livestreaming Monday evening – to be engaged as the Kansas Legislature returns to Topeka next week to grapple with the budget and taxes.
Sizable individual income tax cuts and an income tax exemption for a whole class of businesses led to a widening gap between incoming state revenues and state spending, he pointed out.
“I think that the damage has been pretty deep,” Goossen told an audience of about 50 people at a MOD Squad-sponsored forum at Hutchinson Community College’s Shears Technology Center.
That’s why it’s so important for the Legislature to pass tax reform this session, he said.
Goossen is a former member of the Kansas House of Representatives who served as state budget director under Republican Gov. Bill Graves and Democratic Govs. Kathleen Sebelius and Mark Parkinson. He is senior fellow for the Kansas Center of Economic Growth, part of the Rise Up Kansas coalition seeking to stop Gov. Sam Brownback’s income tax policies.
“Right now Kansans do have to be at meetings like this,” Goossen said. “Our state finances have gone off the rails,” he said, and that “threatens our future as a state.”
Legislators’ energies are focused on just trying to scrape by, he said, instead of addressing larger issues for the future.
“Here’s the good news,” he said. “Kansans have caught on to this.”
Instead of income tax generating $2.93 billion a year for state coffers, it can be counted on to bring in about $2.2 billion and $2.3 billion in each of the next two fiscal years.
Goossen recapped how the state has addressed the shortfall in years since the income tax cuts. The first year, the state spent half its reserves to cover the gap; the second year, it relied on the rest of the reserves plus about $200 million from state highway dollars, he said. The third year, it took more money from the highway fund and other funds. In the current fiscal year, the state is taking more money from the highway fund and borrowing about $300 million.
“None of those actions solved the problem that we’ve actually got,” he said.
When the Legislature returns for the wrap-up session Monday, May 1, it must adopt a two-year budget. Each of the next fiscal years in that budget cycle will have an approximately $800 million to $900 million gap between estimated revenues and expenditures, Goossen said.
Earlier this year, the Legislature passed an income tax hike that would have generated roughly $500 million more a year. That would not have satisfied the complete shortfall. Also, the Supreme Court has told the Legislature the current school finance method is inadequate. A bill in committee would increase state spending by $150 million next year and by an additional $150,000 annually for the next four years.
Kansas has a “very, very significant gap” just in order to stabilize the budget and fund schools, Goossen said, and recovering from the impact of the tax cuts will take time, he said.
Among those in the audience were State Sen. Ed Berger, R-Hutchinson, and Reps. Patsy Terrell, D-Hutchinson, and Steven Becker, R-Buhler. All three voted for the tax hike this year that Brownback vetoed. The trio also voted to override the veto. The veto, however, survived the Senate and the tax hike bill died. Another effort to raise income tax rates and to end the business tax exemption is expected in May.
After the forum, Berger said the Legislature really has to get to work providing a structural fix.
Terrell said she is not interested in a make-do or a temporary fix for the persistent gap between revenues and expenditures. “I’m not interested in anything that doesn’t solve the structural problem,” she said.
Read more from the Hutchinson News here.