Debate on tax cuts, spending intensifying
The debate over state spending and taxes intensified Friday as financial experts released new revenue forecasts for Gov. Sam Brownback and the Legislature to use in forming a budget for the next fiscal year.
State revenue estimators signalled cautious optimism for the economic road ahead, revising upward by $200 million the expected revenue in the current fiscal year from about $6 billion to $6.2 billion. Slow growth is expected to continue in the next fiscal year, bringing the state $6.3 billion in receipts.
“Overall, the economic outlook assumes continued growth in the Kansas economy,” said Alan Conroy, director of the Kansas Legislative Research Department.
Gov. Sam Brownback’s budget director, Steve Anderson, sounded a more cautious tone, saying that nearly half of economists are warning of a possible “double-dip” recession.
“The real issue is we still have so much uncertainty,” Anderson said.
But in recent months, state coffers have received healthy hikes in revenue based on increased receipts of personal income tax and sales tax, officials said.
At the current pace, the state will have an ending balance on June 30, 2012, of nearly $320 million — a far cry from the nearly zero ending balance of a year ago.
Brownback issued a statement on the new revenue figures, saying, “The latest revenue projections show the power of economic growth and controlling spending. It proves the long-term solution for our state involves more jobs and limited government.”
Whether the increased revenue is used to fill in Great Recession budget cuts in education, social services and public safety, or used to provide tax cuts, will be the main fight of the legislative session that starts in January.
Brownback and the state income tax
On the tax front, Brownback supporters hit the highway on a bus tour campaigning for abolishment of the state income tax.
“The only way to spur economic growth is to eliminate the income tax,” said Ashley McMillan, president of Kansans for No Income Tax.
The Kansas group, partially funded by a Missouri billionaire and using a bus with an Alabama license tag, started its tour outside the Statehouse and planned stops in Leavenworth, Pittsburg and Wichita.
Brownback, a Republican, did not appear at the Topeka event, but his chief of staff, David Kensinger, did. Kensinger said he showed up because he was promised hot chocolate.
Brownback has said he wants to reduce the state income tax and his administration is working behind closed doors to propose a major tax overhaul for the 2012 legislative session.
Brownback, and Kansans for No Income Tax, say getting rid of the levy will spur economic growth, similar to Texas, which doesn’t have a state income tax.
Cuts to schools felt as enrollment increases
But Democrats and some Republicans say eliminating the state income tax will force increases in other taxes, cuts in services, or both. They also say Kansas shouldn’t follow Texas’ tax policy since Texas lags behind Kansas in many quality of life areas, such as education, roads and social services.
The issue is likely to be one of the most contentious of the upcoming session. Eliminating the state income tax would take a huge chunk out of state revenue.
In the last fiscal year, Kansas brought in about $5.9 billion in tax revenue. Of that amount, about $3 billion came from state income taxes — about $2.7 billion from individual income taxes and the rest from corporate income taxes.
Meanwhile, the Kansas Department of Education released a report showing that state budget cuts to public schools have resulted in fewer teachers and more-crowded classrooms.
The total number of teacher positions statewide in the current school year is 34,075.
That is a drop of 256 from last year and 1,363 since the 2008-09 school year total of 35,438.
Meanwhile, student enrollment has increased from 473,097 in 2008-09 to 482,798 in the current school year. That is an increase of 9,701 students. During that time, the Lawrence school district grew from 11,007 students to 11,613 students, an increase of 606 students.
The elimination of teacher positions coincides with cuts to school funding.
In the 2008-09 school year, base state aid to public schools was $4,400 per pupil. That figure is now $3,780 per pupil following several rounds of cuts, including the latest one of $232 per pupil approved by Brownback.
House Democratic Leader Paul Davis, of Lawrence, said he hoped the increased revenue figures would persuade Brownback to help schools.
“It is encouraging to see that the Kansas economy is on the uptick. Earlier this year Gov. Brownback made the largest cut to Kansas schools in state history. I hope he will see this as an opportunity to renew our commitment to public education so that our children will have a competitive advantage in the 21st century economy,” Davis said.
Tax-cutting group has out-of-state ties
But Kansans for No Income Tax focused on cutting the budget.
Outside the Statehouse visit, about 35 people gathered, mostly Republicans and Republican staff members.
Reps. Richard Carlson, R-St. Marys, who is chairman of the House Tax Committee, and Joe Patton, R-Topeka, spoke, as did Dave Trabert, president of the Kansas Public Policy Institute, and representatives from FairTaxKC.
It was reported in recent days that Missouri anti-tax billionaire Rex Sinquefield has contributed to Kansans for No Income Tax. Sinquefield and McMillan have refused to say how much he contributed.
“We enjoy support from folks in Kansas and like-minded folks throughout the United States, and we are very pleased with that,” McMillan said.
When asked why the Kansans for Income Tax bus has an Alabama tag, McMillan said, “That’s the bus that was available to us.”
During the 2010 gubernatorial campaign, Brownback was criticized by some for leasing a campaign bus from an Alabama company for use on his campaign.
By Scott Rothschild