Last Tuesday in Topeka, Governor Sam Brownback of Kansas signed a $15 billion state budget that squeaked through the Republican-dominated Legislature after an unprecedented, 113-day session—more than three weeks longer than the 90 days called for under state law. The governor simultaneously signed a pair of bills that raised $384 million in revenue by hiking the state’s sales tax and a host of other levies, including on cigarettes.
“I don’t know that anybody’s happy about it,” Brownback said.
Talk about an understatement. According to various reports from the state capital, several lawmakers cast their votes in tears, one Republican accused the governor’s administration of blackmail, and exactly no one thought the plan actually solved the state’s longterm budget woes. “Next year will be my 40th year in the Legislature, and I have never seen a session like this one,” Anthony Hensley, who leads the Senate’s small contingent of Democrats, told me by phone on Friday. “It was completely chaotic and dysfunctional.”
All that new revenue, along with about $50 million in spending cuts, was needed to close a deep deficit that had embarrassed its conservative governor and thrown its legislature into a months-long gridlock that resembled, well, Congress. As we wrote in April, the deficit resulted in large part from Brownback’s own “real live experiment” in supply-side economics—sharp cuts in income tax rates and a huge exemption for owners of small businesses.
Ask any fiscal expert, and Kansas’s budget crisis demanded a reckoning—either with its tax code or its longterm spending structure. But its government wasn’t up to it. Aligned with conservatives in the Senate, Brownback steadfastly refused to consider a direct reversal of the original tax plan, insisting that the state continue on its path toward replacing the income tax entirely with consumption taxes. The most he would do was freeze the rates, and the result was a plan that will place an even heavier tax burden on the poor, according to the Institute on Taxation and Economic Policy. Hensley said that when state and local sales taxes are combined, Kansas will have the highest tax on food in the nation in some areas of the state. Brownback, who had hired the economist Arthur Laffer to help craft his original tax plan, had been touting the state’s economic recovery to argue that his fiscal vision was starting to work. But a report released Friday found that Kansas had lost nearly 4,000 jobs in May, trailing both the national trend and neighboring Missouri, which added 6,600 jobs.
Lori McMillan, a tax expert and law professor at Washburn University, told me during the middle of the impasse that Kansas lawmakers seemed “paralyzed” by the crisis and the many unpalatable choices they faced. By the time it was finally over, Brownback appeared—at least to his many critics—to be in denial. As described by the Wichita Eagle, the governor refused to acknowledge that he had signed a tax increase. “Look at the totality of the picture,” he said, referring to the far deeper tax cuts he had signed in previous years. “When you look at that, it is a tax cut.”
Nobody else saw it that way. “Not only is this a tax increase, it is the largest tax increase in state history,” Hensley responded in a statement. When I called up Will Upton, the state-affairs manager for Grover Norquist’s Americans for Tax Reform, he described the budget that Brownback signed in almost exactly the same words. Norquist serves as something of an arbiter of tax increases among conservatives, and he’s famously said his goal is to shrink government to a size where you can “drown it in a bathtub.” The problem in Kansas, Upton said, is that while Brownback had succeeded in shrinking the tax burden, he did little to shrink spending.
When the tax cuts were first enacted, Upton said, Democrats and moderate Republicans succeeded in removing provisions that would have softened the fiscal blow. And when Republicans tried to close the budget gap this year, Brownback blamed Medicaid, education, and the state’s pension system as the drivers of the deficit, but there was little effort made to address them. “No one’s really looked at long-term reform yet. They throw up their hands and say, ‘We tried.’ No, they didn’t really try,” Upton said. “The governor needs to learn, and I think a lot of the people in the legislature needs to learn, when you cut taxes in the manner that they have, you need to also cut spending.”
That, of course, is easier said than done. As politically unpopular as any kind of tax increase is, cutting money from healthcare, schools, or retirement funds would spark an even bigger backlash. In that respect, the outcome in Kansas recalls the complaints of conservatives during the George W. Bush administration, when taxes went down but the government—and the deficit—grew. Modest tax increases, spending restraint, and economic growth have helped cut down the gap, but it is far from closed. Kansas may be facing a similar future. Brownback “has sold the Legislature a bill of goods,” Hensley lamented. “Consequently,” he added, “we are going to have a budget shortfall for years to come.”