Members of the Kansas Legislature and Gov. Jeff Colyer are on a mission to convince voters they won’t need to raise taxes due to the Great Court Capitulation of 2018. They’re pinning their hope on rainbows and unicorns.
Lawmakers scraped together enough votes in a midnight session this weekend to pass a $500 million spending package for new school funding. Though its advocates say Kansans can foot the bill without increasing taxes, that’s not exactly accurate.
Paying for it requires lawmakers keep a federal tax reform windfall that, by right, should be returned taxpayers. Giving it back to Kansans, though, requires legislative action, whereas pocketing the money doesn’t.
“When the taxpayers pay more, it’s a tax increase,” says Rep. Jene Vickrey, a Louisburg Republican. “You can say you’re not raising taxes, but I don’t know how you explain that any other way. If the taxpayer is writing a bigger check to Kansas, it’s a tax increase.”
Even Politico has taken note that federal tax reform is “triggering a wave of state income tax increases across the country.”
“In many states, the tax hikes are coming without legislators ever needing to take a vote — thanks to state tax laws that are automatically synched to changes in the federal code. That’s raising fears, particularly among business groups, that instead of reversing the increases, cash-hungry statehouses from New York to Minnesota to Colorado will just let their taxes go up,” the story reads.
Such is the case in Kansas, where lawmakers aren’t denying they intend to use the so-called federal tax reform “windfall” to pay for new spending. Lawmakers are also counting on revenues continuing to beat projections and continued growth in the U.S. economy, but there’s a fly in that ointment–especially for Kansas.
After President Donald Trump announced a series of tariffs on the import of some Chinese goods, China threatened to retaliate with tariffs on soybeans and airplanes. Agriculture and airplane manufacturing account for a large percentage of Kansas GDP, and anything that damages those industries could wreak havoc on the state’s budget.
Meanwhile, lawmakers are counting on sweeping highway funds, cutting into statutorily required ending balances, and shorting KPERS payments in order to make up the rest of the difference so they don’t have to raise taxes.
“The plan not only assumes everything goes right. It assumes everything goes really well, and we violate state law, and we empty the highway fund,” Kansas Policy Institute President Dave Trabert told the Sentinel.
Vickrey calls the school funding scheme a “primer for a tax increase.”
Lawmakers may not need to increase taxes this year, but in future years, the spending quickly becomes untenable.
“Aside from a miraculous economy, there will be a tax increase or a major budget cut,” Vickrey says. “You can’t fund KPERS, our highway plan, mental health, public safety and all things we need to also do well and fund this kind of increase on top of the millions we already gave schools last year. It’s a budget buster.”