Without federal help, Kansas faces ‘nasty cocktail’ of budget choices next year
State and federal reports indicate the unemployment rate in Kansas fell to 5.9% in September, a drop of 1 percentage point from August and a reduction from a rate of 11.9% in April at height of the COVID-19 economic shutdown. (Sherman Smith/Kansas Reflector)
The Kansas Reflector welcomes opinion pieces from writers who share our goal of widening the conversation about how public policies affect the day-to-day lives of people throughout our state. Chris W. Courtwright spent 34 years as the Kansas Legislature’s principal economist and is the author of “Kansas Tax Facts.”
In the wake of a wild roller-coaster ride of state tax changes and self-described “experiments” by the previous administration, Gov. Laura Kelly established her Council on Tax Reform in 2019 as a bipartisan panel designed to take a comprehensive look at the Kansas state and local tax systems.
The charge she gave the council to evaluate the overall adequacy, equity and stability of the tax structure and make recommendations for improvement is much more crucial now in 2020, given the stress on the public sector and the economy from the COVID-19 pandemic.
Based on my experience over more than three decades, and given the size of projected state budget woes as a result of this crisis, I anticipate people will be looking at a nasty cocktail of policy choices featuring many of the things politicians dislike doing the most when the 2021 legislative session convenes in Topeka in January.
Painful budget reductions and fund sweeps, along with various accounting gimmicks that rob from the future to fill the current shortfall — but make future shortfalls even bigger — will almost certainly be on the table.
And given how dramatically the fiscal situation has deteriorated throughout 2020, any number of tax cuts discussed in recent years will be far less likely to be enacted in 2021. This means advocates for grocery sales tax relief, property tax freezes for certain seniors, and powerful special interests pushing a smorgasbord of corporate tax breaks may well be disappointed again when the final gavel falls.
During the Great Recession a decade ago, the federal government successfully prevented state and local budget crises from being far worse than they otherwise would have been thanks to the landmark American Recovery and Reinvestment Act in 2009. President Barack Obama and his advisers who designed that legislation made sure it had not just shovel-ready infrastructure spending that helped stimulate the economy, but also significant revenue sharing aid that helped backfill collapsing state and local revenues.
Unfortunately, a great deal of money that would be similarly earmarked now during the current crisis for Kansas and other states in the proposed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act approved by the U.S. House in May has gotten stalled as a result of opposition in the Senate and White House.
Unless that stalemate gets broken, the magnitude of budget cuts, sleight-of-hand budget tricks and other unattractive options under consideration in Kansas will be much worse as a direct result of the federal failure to provide another round of state and local aid.
At that point, anyone upset about tax and budget decisions around our state in 2021 should be able to draw a straight line back to the people who obstructed the legislation in Washington, D.C., this summer and fall.
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