Today Governor Nixon stepped up and met his responsibility to the state and we owe him bigtime:
Nixon vetoed the disastrous GOP tax cut bill HB253. Over a ten year period, the bill would have cut corporate income taxes from 6.25% to 3.5%, and personal income taxes from 6% to 5.5%. As Nixon explained, “with a price tag of $800 million, this legislation is an ill-conceived, fiscally irresponsible experiment that would hurt our economy and jeopardize funding for vital public services.”
The reaction was swift, with GOP legislators raging about how radical tax cuts are the only way that Missouri can compete with neighboring Kansas, which has gutted its tax system. The general theme seems to be that Kansas is thriving under its new tax regime; as the Missouri branch of the Koch-funded Americans for Prosperity (AFP) put it when decrying Nixon’s move, “Many of our neighboring states have made bold reforms in the area of taxation, which have catapulted their states into being some of the most economically strong states in the union.”
Kansas is economically strong? Surprising news indeed – although it is not so surprising that it comes from the AFP since an AFP consultant on budgetary matters has been appointed Kansas’ budget director. The jury is still out (way, way out) on whether the tax cuts will spur growth – although we do know that the Bush tax cuts did not result in an economic boom – the Obama administration has already, in five years, bested the eight-year Bush administration record of job creation – in spite of having to beat back the massively deep Bush recession.
Right now, Kansas is not only promulgating a “red-state economic model”, it’s seeing reams of red, red ink that is. A predicted loss of $700 million dollars in revenue for the fiscal year beginning in July means serious budget cuts are ahead – and Kansas Governor Sam Brownback has already radically slashed spending. You name your program and it’s gonna be cut more and cut bad: education, transportation infrastructure, social services. And it’s likely to get worse if the tax-cutting experiment doesn’t work the way Kansas’ GOP is betting it will:
To make up for the revenue drop, the governor is pushing to preserve what was meant to be a temporary increase in the state sales tax, and to eliminate two popular deductions, including the state write-off for home-mortgage interest payments. Those moves would raise about $600 million next fiscal year. He also wants to transfer more than $100 million from a state highway fund to cover other expenses.
Estimates prepared by the state’s legislative research department predict that, even with the steps Mr. Brownback proposes, Kansas is on track to be short of money. The estimates suggest that the state will need to lean on its reserves in the coming years, and lawmakers by 2017 will be forced to make $780 million in spending cuts to prevent a deficit, which isn’t allowed under Kansas law. A Brownback aide said the forecasts don’t take into account the beneficial impact of the tax cuts.
Although, given the sales tax situation, one can argue that Kansas hasn’t really eliminated income taxes, it’s just asking poor folks to pay for all that magical economic growth that will surely reveal itself any day now. Huffington Post quotes one Kansas resident who states that if the home mortgage deduction is eliminated, she will move back to Missouri. Ironic, no?
But not surprising since Kansas is taking a big gamble on radical supply side economics with no real evidence that it will work – and lot’s of history that says it won’t. Why do Missouri’s legislators want us to jump off the same cliff? Shouldn’t they at least wait to see if Kansas survives the fall? Governor Nixon is right to insist that we proceed cautiously and make sure that we can take care of our citizens’ needs. HB253 was passed by a vote of 103 to 51, six votes less than the number required to override Nixon’s veto. We’ve got to keep it that way or we’ll go the way of Kansas.