Why Kansas Raised Taxes
Kansas is a conservative state with a Republican-controlled legislature. Nonetheless, this year lawmakers approved a temporary sales tax increase. Why did Kansas raise taxes? Senate President Steve Morris makes the case that his state didn't have any other choice.
Kansas is a conservative state with a Republican-controlled legislature. Nonetheless, this year lawmakers approved a temporary sales tax increase. Why did Kansas raise taxes? I just sat down with Senate President Steve Morris, who made the case that his state didn't have any other choice.
Here's how he explained it. In the 2009 fiscal year, Kansas' general fund was around $6.5 billion. The fiscal year 2010 budget (written in 2009) had to be dramatically downsized, both in the regular budget process and in subsequent cuts by Gov. Mark Parkinson. As a result, when lawmakers this year went to write the 2011 fiscal year budget they were starting from a general fund base of $5 billion. They faced a shortfall of around $450 million.
To find that $450 million, they were limited in their ability to cut education. That's because in accepting stimulus funds states pledged to at least spend as much on education as they did in FY 2006. That provision, designed to prevent states from shifting federal money intended for education to other areas of government, tied lawmakers' hands. Higher education is 13% of the general fund and K-12 education is 52% of the general fund so right there 65% of the budget was off the table.
Another 20% of the general fund is Medicaid. Lawmakers weren't willing to cut Medicaid. Morris didn't say this, but presumably there were significant limitations in how much they could have cut even if they wanted to. Medicaid is an entitlement program, so it's not as though the state can set whatever eligibility standards it wants. It's also a program with costs that reflect forces outside of the control of state budgeters -- most notably rising health care costs.
With Medicaid and education off the table, only 15% of the general fund was left for cutting. That was less than $800 billion. “To try to take that $450 million out of that $800 million," Morris says, "that wasn’t going to work.”
If Kansas is like other states, most of that remaining money probably goes to corrections. So, if you want to be dramatic about it, the remaining options were to raise taxes or let most of the state's prisoners go free. I'll note that not everyone agrees with this analysis. But, ultimately most legislators did. The penny-per-dollar sales taxes increase will raise $314 million a year.
Morris (a Republican), by the way, had glowing things to say about Parkinson (a Democrat), who played a key role in pushing for the sales tax increase. In some ways, Morris' fondness for the governor isn't surprising. Parkinson is a former legislator. Morris described him as a personal friend. Still, I could easily have imagined a scenario where Republican lawmakers regarded Parkinson as Benedict Arnold after the former Kansas Republican Party Chairman left the party to join Kathleen Sebelius' ticket.
Instead, Parkinson and moderate Republicans in the legislature worked together to produce a remarkably productive (though brief, since he's not running for a full term) governorship. "He has, in my view, done a very good job," Morris says. "As I stated before, he’s a person that’s truly interested in good public policy and cares deeply about our state. And I know that he probably at some point will do something else in the political arena.”
I'll be very interested to find out what that "something else" might be.
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