The state of Kansas is running out of money in its rainy-day fund because it made huge cuts in income tax rates in 2012. It took in $338 million less than expected in the 2014 fiscal year.
Governor Sam Brownback pushed for these cuts, claiming they would pay for themselves with increased economic growth. His plan eliminated taxes on small businesses, reduced the top tax rate by 25 percent and made lesser reductions for lower rates. He partly paid for these cuts by cutting the state budget, narrowing eligibility for welfare and Medicaid and ending guaranteed teacher tenure, which was instituted in Kansas in the 1950s.
The tenure changes let school districts lay off more experienced and higher-paid teachers and replace them with new, less experienced and lower-paid ones.
According to the June 10 Wall Street Journal, tax collection was down $685 million for the first 11 months of the 2014 fiscal year.
Every state in the U.S. has a different tax system. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no income tax. In some states like New York, even cities have income taxes.
Sales taxes are another wrinkle. Some states use them, some don’t. Some states like Kansas let sales taxes be leveled at the city, county, school, transportation and special purpose district levels. Since sales taxes are almost always a fixed percentage of the price, and wealthy individuals often buy nontaxed items, sales taxes fall most heavily on workers and the poor.
National Public Radio, the New York Times, Wall Street Journal and Daily Beast have all analyzed the holes in Brownback’s economic policy, debunking his positive claims and pointing out that the benefits almost totally went to the wealthy, while schools and other essential services suffered serious cuts. Their conclusion is that these cuts are creating an unnecessary budget crisis and not doing what Brownback claimed they would do.
All these national media analyzed Kansas’ financial crisis in the context of Brownback’s re-election campaign this year, since he has promised to stay the course and strengthen the cuts and the ensuing austerity. What happens in Kansas, until now a reliably Republican state, has national implications.
What’s missing from the national media is any major consideration of how Brownback’s austerity is impacting workers and poor people. For example, his refusal to expand Medicaid coverage means that 78,000 low-income people in Kansas won’t get health coverage. (thinkprogress.org, April 21)
While educational funding has gone up, the increase went to legally required pension payments. Spending per pupils in kindergarten through 12th grade is down 17 percent in 2014. (USAToday, Sept. 25) Brownback is vulnerable on the issue of education because the children in Kansas’ school system are suffering.
Kansas is just one example of a state that has embraced austerity.