By MICHAEL A. SMITH
Insight Kansas
It has been fourteen years since former Governor Sam Brownback’s disastrous “Great Experiment,” which cratered state revenues, slashed social services, and landed the state in court over school funding. Have policymakers already forgotten? Perhaps so.
Last year, the Kansas Legislature passed another income tax cut over Governor Laura Kelly’s veto. Like Brownback, legislators claimed that the tax cut would pay for itself with economic growth and net migration. Instead, this year, the Legislature seeks to close a $200 million shortfall by battering already hard-hit higher education and social services.
On the border, Missourians had a front-row seat to watch the Brownback experiment. Yet this year, Missouri Governor Mike Kehoe proposed a near carbon copy of Brownback’s plan, including incremental reduction of the state tax rates (Brownback’s “glide path to zero”) and the false promise that lost revenues can be made up with economic growth and net migration, along with use taxes, which are sales taxes on services.
Since Kansans and their neighbors seem to have forgotten, here is a brief primer on the Great Experiment. In 2012, Brownback convinced the Legislature to incrementally lower the state income tax and replace the revenue with compensating use taxes, economic growth, and net migration. Three tax brackets were reduced to two, the top bracket was reduced from 6.45 to 4.9%, and LLCs paid no tax at all.
Public revenues plummeted by more than half a billion dollars during the first year after the tax cut. They remained at this lower level consistently until a bipartisan supermajority overrode a veto and ended the experiment in 2017. Use taxes replaced less than a quarter of the revenue lost.
No economic growth or net migration resulted from the Experiment. In fact, during this period, Kansas had lower net migration than all neighboring states– each of which has an income tax. Nor was it popular. Shortly before he resigned the governorship to become U.S. Ambassador of Religious Freedom, Brownback had the second-lowest popularity rating of any U.S. governor.
To cope with this manmade disaster, the state adjusted by cutting funding for social services so low that children were sleeping in welfare offices. The federal government threatened to pull funding from state mental health facilities due to understaffing. Prison riots broke out in overcrowded conditions. The state also borrowed over $1 billion from the highway trust fund (the “Bank of KDOT”), and eliminated funding for the arts. The state cut school funding so much that it landed in court. The Legislature’s attempt to replace the Base State Aid formula for schools with block grants was also rejected by the courts. The formula was restored the following year. During the Experiment, school districts were forced to rely more on property taxes to replace state aid.
None of this should come as a surprise. According to the Center for Budget and Policy Priorities, states without an income tax have property taxes that are 12% higher and sales taxes that are 20% higher, on average. Property taxes fall hardest on retired homeowners with fixed incomes, while sales taxes fall hardest on the poor.
They say that those who don’t learn the lessons of history are doomed to repeat it. This year, both the Kansas Legislature and the Missouri Governor seem bound and determined to prove this true.
Michael Smith is a professor of political science at Emporia State University.