Kansas budget director says job growth eventually will restore revenues

Others contend rebound impossible as long as tax cuts remain in place

by Jim McLean, KHI News Service

A $21 million shortfall in September tax collections has renewed the debate on Gov. Sam Brownback’s economic policies heading into the last month of the 2014 campaign.

During the last five months, tax receipts have fallen more than $360 million short of official projections, driven largely by the 26 percent reduction in income tax rates championed by Brownback and passed by the Republican-controlled Legislature in 2012 and 2013.

The continuing shortfalls are forcing the state to spend through its reserves, a strategy that analysts in the nonpartisan Kansas Legislative Research Department say could put the state nearly $240 million in the red by July of 2016.

Paul Davis, Brownback’s Democratic challenger, used the September revenue report to launch another attack on what he calls the governor’s “failed policies.”

“The governor’s economic experiment isn’t working, and it’s not going to work,” Davis said in a campaign news release. “It is damaging our schools, hurting our economy and putting our children’s future in jeopardy.”

Brownback and others in the administration insist that the drop in revenue is temporary and that the tax cuts will transform the Kansas economy if given enough time to work.

Shawn Sullivan, director of the governor’s budget office, said small business owners whose taxes were eliminated by the cuts are telling him they eventually will use the money they’re saving to create new jobs.

“What they tell me is, ‘These tax cuts and these policy changes take time (to work),’” Sullivan said. “These tax policy changes aren’t like you flip a switch and you have 100,000 new jobs. It’s trying to set the environment right for small businesses that employ the majority of Kansans.”

Kansas is doing well compared to neighboring states when it comes to job growth in the small business sector, Sullivan said.

Revenue Secretary Nick Jordan points to the $21.5 million collected above the September estimate in corporate income taxes as an indication of the state’s improving business climate. But critics say the corporate tax windfall was more than offset by a $42.4 shortfall in individual income tax receipts.

Broader measures reported by the U.S. Bureau of Labor Statistics still show the state lagging the region and nation in job growth.

To head off possible budget cuts, Sullivan said the administration is implementing “efficiencies” that he estimates can save $101 million by the end of the 2015 budget year.

Eventually, Sullivan said, he expects that taxes paid by Kansans hired to fill the new jobs created by the governor’s tax policies will restore state revenues to pre-cut levels.

But Duane Goossen, a former budget director who worked for both Republican and Democratic governors, said that is wishful thinking.

“It seems almost impossible to think given our current tax structure that increased economic activity could replace the losses that have occurred,” Goossen said.

Neither the governor nor anyone in his administration has been able to show precisely how the job growth they’re hoping for will restore the lost revenue, Goossen said.

“In fact, the opposite is true,” he said. “The Kansas Legislative Research Department has been predicting and forecasting all along that with these tax changes revenue would drop dramatically, and it has.”

The KHI News Service is an editorially independent initiative of the Kansas Health Institute. It is supported in part by a variety of underwriters. The News Service is committed to timely, objective and in-depth coverage of health issues and the policy-making environment. All News Service stories and photos may be republished at no cost with proper attribution, including a link back to KHI.org when a story is reposted online. More about the News Service is at khi.org/newsservice or contact 785-233-5443.

T-Bones named league’s ‘Organization of the Year’

The American Association announced Wednesday that the Kansas City T-Bones have been selected as the league’s “Organization of the Year” for the 2014 season.

The T-Bones have received the honor, which is awarded by the commissioner’s office, four times since moving to Kansas City, Kan., prior to the 2003 season.

“It’s our privilege to give Kansas City this award,” said American Association commissioner Miles Wolff. “From (owner) John Ehlert down, the T-Bones have always been a first-class organization, and one of the best-run clubs in our league.”

“It’s a tremendous honor to receive this award,” said John Ehlert. “It’s a testament to the hard work that president Adam Ehlert, vice president and general manager Chris Browne, our entire front office staff and baseball staff put into each and every season. Of course, we’re grateful to our wonderful sponsors and fans who make all of this possible.”

The award is coming on the heels of the T-Bones finishing in the top five in average attendance among independent teams for the seventh consecutive season, and in the top 50 among more than 350 teams from the affiliated minor leagues, independent leagues and summer-collegiate leagues. In late July, the club welcomed its 3 millionth fan to CommunityAmerica Ballpark in Kansas City, Kan.

On the field in 2014 under manager John Massarelli, who was in his first year with Kansas City, the T-Bones finished 48-52, which was an eight-game improvement from 2013. The team finished in third place in the Central Division, 6 games behind division winner Lincoln. Along the way, reliever Kris Regas set the T-Bones single-season club record for saves with 22, and T.J. Mittelstaedt set a club record by reaching base in all 51 games at CommunityAmerica Ballpark.

The T-Bones continue to be active in the community, too. In addition to its popular youth reading program, the club has provided more than $700,000 to various Wyandotte County Parks and Recreation projects through the T-Bones Uncommitted Recreation Fund (TURF), which was created in partnership with the Unified Government when the T-Bones began play in Wyandotte County in 2003.

The T-Bones were awarded the “Organization of the Year” three times while in the Northern League (2004, ’07, ’10). This is the first time they’ve received the award since joining the American Association in 2011.

- Story from T-Bones

Thursday’s events

6 p.m. Thursday, Oct. 2, Village West Parade of Heroes, at Village West Parkway to Stadium Drive. The parade is located at the Village West area near The Legends Outlets. The parade is presented by the Village West Rotary Club.

5 and 7 p.m., Unified Government Commission to meet, Thursday, City Hall, 701 N. 7th St., Kansas City, Kan.

8 p.m. Thursday, Kansas City Royals play at California Angels. Game 1 of the post-season American League division playoff is at Angels Stadium at Anaheim, Calif. The game will be seen and heard on TBS-TV and on ESPN radio.