By J. Mac Holladay, President, CEO, and Founder
Late last week, the Kansas Legislature overrode the Governor’s
veto to repeal the radical tax plan passed in 2013. The program was supposed to
usher in a flood of new jobs. The promised job growth never came. In fact,
Kansas gross domestic product grew only .2 percent last year compared to 1.6
percent nationally. Several surrounding states with stable tax systems have
flown by Kansas both in job creation and increased investment.
What did come to the state was a huge deficit in the state
budget and drastic cuts to education at all levels. During this failed
experiment, state school spending dropped from $4,400 per pupil to $3,800 with
the poorest districts suffering the most.
The state had $700 million less revenue in 2014 than the year
before, and this March the Kansas Supreme Court ruled that the funding for
public education is “unconstitutionally low” and must be changed.
As Republican State Senator Dinah Skyes said, “we had to take
a vote to say no and say, this is not the right direction.” While every state
seeks to be competitive on costs, the Kansas experiment went to the extreme in
letting thousands of small businesses pay nothing at all and radically reduce
personal income taxes.
Earlier this year, one University President in Kansas asked
me, how can I plan anything in this atmosphere? A key component of good tax
policy is certainty. Both public and private leaders need to know what is going
to happen related to stability and revenue flow. Companies looking to expand or
locate want to know that their employees will have excellent educational
opportunities for them and their children.
Beyond talent, quality of place is the number one factor in
healthy local economies. Our firm has been working in several cities in Kansas
recently, all are dedicated to making their place better. In recent years, they
have been unable to know what exactly was coming or to get any help from the
state. Now, maybe that can change. The Legislature has approved a $1.2 billion
revenue increase over the next two years.
Kansas is another clear example, we cannot cut our way to
prosperity.
