Kansas Gov. Sam Brownback – the supply side Republican who made his reputation by slashing income taxes in hopes of boosting his state’s economy -- now finds himself on the wrong side of the tax issue.
With his state facing large deficits because of a chronic deficiency in tax revenues brought on by the governor’s zealous tax cuts shortly after taking office, Brownback reluctantly asked the state legislature to raise sales and cigarette taxes to help close a yawning budget deficit. Without it, he warned, the state would have to make deep and dangerous cuts to schools, prison and other programs.
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Brownback and senior aides met with Republican legislators Thursday afternoon and laid out a grim scenario unless the state figured out a way to balance the budget by Monday, one that included a likely downgrade of the state’s bond ratings.
“You've just got to act," Brownback said. "I'm pleading with you, really, to just one more time, just get in the saddle."
The Republican-controlled House responded by voting 95 to 20 against the governor’s tax increase -- an extraordinary repudiation of Brownback. But by the early hours of Friday morning, those lawmakers had second thoughts, and finally voted to accept the tax increase plan.
With the concurrence of the state Senate, the legislature approved $384 million in new revenue for the coming fiscal year, including an increase of the sales tax to 6.5 percent from 6.15 percent and an increase in the cigarette tax by 50 cents a pack to $1.29.
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It would be easy to say that Brownback got his comeuppance after years of experimentation with tax policy that for many defied logic and did little to improve the economy or create new jobs.
Brownback, a former U.S. senator, rose to power promising to slash taxes, downsize government and spur economic growth. A handful of conservative governors, including Brownback and Bobby Jindal of Louisiana, have for years promoted supply-side tax cuts as an elixir for the economy -- one that can actually increase revenues.
Brimming with confidence that he could provide “a shot of adrenaline” to his state’s economy, Brownback pushed through a major state tax overhaul in 2012 and 2013. It included a 25 percent reduction in the top income tax rates and tax cuts on various types of income.
But there were numerous warning signs that state revenues were running far behind projections, and that a fiscal crisis was on the horizon. In the months leading up to his reelection last fall, Brownback repeatedly dismissed or downplayed state reports and analyses showing that his tax cut strategy was cutting into the flow of state tax revenues and driving up the deficit.
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In late January, however, a seemingly chastened Brownback proposed a slowdown in income tax cuts — plus major tax increases on tobacco and liquor — as part of fixing a budget shortfall projected at $648 million for the next fiscal year. The proposal was similar to one from his Democratic opponent last fall.
Yet even after a humiliating few days of having to beg the legislature to go along with a huge increase in tax revenues, Brownback appears to be unfazed. He argues that Kansas will still have "pro-growth" economic policies if it preserves most of the income tax cuts he helped pass, even with increases in the sales and cigarette taxes.
"Nationally, Kansas is not the model any state is looking to follow right now," Joseph Henchman, a vice president at the Washington-based Tax Foundation, told the AP. "What have you gained if you've cut taxes and the state becomes insolvent?"
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