Kansas' 2012 Tax Cut Experiment Could Serve As A Cautionary Tale

People in Kansas are struggling to recover from the state's experiment with deep tax cuts. What happened in Kansas is similar in many ways to what Congress is attempting to do on a national level.

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The Republican tax overhaul is based on the idea that corporate and income tax cuts will spur economic activity and pay for themselves. This is a familiar argument for people in Kansas. Five years ago, Republican leaders there passed deep tax cuts believing they would stimulate the state's economy. NPR's Wade Goodwyn reports.

WADE GOODWYN, BYLINE: Ask Kansans what's the best thing about their state and many will say the people and it has really good roads. But the thing they're most proud of - Kansas's long history of quality public education. Martin Stessman is the superintendent for Shawnee Heights United School District in Tecumseh, Kan., for elementary, a middle and a high school.

MARTIN STESSMAN: We're a mixture of rural and suburban families and kind of a good-ol-blue-collar place.

GOODWYN: Stessman says the first deep budget cuts to schools came during the Great Recession. Between 2009 and 2012, there were round after round of layoffs and cutbacks. And when it seemed like the district was finally beginning to climb out, Governor Sam Brownback's tax cuts were put into place.

STESSMAN: So we'd seen drastic cuts and then this came. Literally over a one-year period, income tax collections dropped by a quarter - 25 percent. It just pretty much destroyed any possibility of replacing the cuts that we made.

GOODWYN: All across Kansas, school programs were eliminated. Maintenance took a hit. Teaching positions were phased out, and the school year was shortened. In Shawnee Heights, finally, there was no choice but to begin cutting the high school's beloved football program.

STESSMAN: When we cut half-a-dozen coaching positions, all of the booster clubs came to us and said, we'll raise the money to fund that position and they did. But nobody lines up when you reduce three custodial positions, cut a couple of parent positions and reduce teaching positions. I'm not being critical, that's just what happened here.

GOODWYN: The Brownback tax cuts in Kansas sprang from the Republican electoral landslide in 2010. Lots of moderate Republicans were replaced by their Tea Party brethren.

HEIDI HOLLIDAY: The Kansas Legislature passed a tax experiment that Governor Brownback billed as a real-life experiment that would be a shot of adrenaline into the heart of the Kansas economy.

STESSMAN: Heidi Holliday heads the nonpartisan Kansas Center for Economic Growth. Holliday says 300,000 businesses saw their tax rates go all the way to zero. In a state the size of Kansas, the revenue loss was massive - a gaping $700 million hole in the first year alone. She says the cuts to the public sector acted as a drag on the state's private sector economy.

HOLLIDAY: We were told that we were going to get jobs and that our economy would grow, and none of them ended up happening. What did happen was we had nine consecutive rounds of budget cuts. We had three credit rating downgrades as a state. We saw stagnation compared to our neighbors in the region and in the rest of the country.

GOODWYN: Brownback had promised the tax cuts could spur up to 25,000 new jobs a year but that proved wildly optimistic. Kansas actually lost jobs the first year. Roads went from a 10 to a 50-year maintenance schedule. Nevertheless, the legislature was still forced to raid the State Employees' Retirement Fund, then it raised the sales tax twice. With the state lagging behind its neighbors economically, public school financing a mess and budget chaos in the Capitol, Governor Brownback's popularity fell off a cliff. Last year, a wave of moderate Republicans swept into office at the right wing's expense. They partnered with Democrats, rescinded Brownback's tax cuts and overrode his veto. After four years, the great Kansas tax experiment was over.

MELISSA ROOKER: I'm a Republican, so I get it. We want government to have a minimal footprint on our lives, but that doesn't mean that we want to live in an anarchy that has no government.

GOODWYN: That's Kansas House Representative Melissa Rooker, one of the newly-elected Republican moderates. Contemplating the recently-passed tax legislation in Washington, D.C., Rooker sounds one note of warning.

ROOKER: What I would say is math matters and people can't ignore reality. If the plan mimics at all the effect on the economy that we saw in Kansas, there will be consequences, absolutely.

KRIS KOBACH: Kansas doesn't have a revenue problem. Kansas has a spending problem.

GOODWYN: Kris Kobach is the Kansas secretary of state, a front-runner for Kansas governor and President Trump's point man on election integrity. A consistent and unflinching supporter of Brownback's tax cuts, Kobach says he'd bring them back.

KOBACH: I made it very clear that if I'm elected as governor, I will try to roll back the tax hikes over the 2017 legislative session and that we should return to a more low-tax structure like we had from 2013 to 2016.

GOODWYN: But with the new makeup of the Kansas legislature, that may prove difficult. The lesson learned here seems to be that tax cuts did not supercharge the state's economy. For Governor Brownback, the end result was a humiliating political backlash, with members of his own party rescinding his tax cut pride and joy.

Wade Goodwyn, NPR News, Lawrence, Kan.

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