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Kansas Budget Crisis "A Warning For WV"

Observers say a Kansas budget crisis has a lesson for West Virginia lawmakers: that tax cuts there have not brought the promised economic growth. Graphic (based on federal figures) courtesy of Kansas Center for Economic Growth.
Observers say a Kansas budget crisis has a lesson for West Virginia lawmakers: that tax cuts there have not brought the promised economic growth. Graphic (based on federal figures) courtesy of Kansas Center for Economic Growth.
June 22, 2015

CHARLESTON, W. Va. – A diehard anti-tax Kansas Legislature has just passed the largest tax increase in that state's history - and a former Kansas budget director says that should be a warning to a West Virginia tax reform task force.

Duane Goossen, now a senior fellow with the Kansas Center for Economic Growth, says three years ago, Kansas lawmakers passed huge tax cuts in the expectation that economic growth would replace the lost revenue. But he describes the flood of red ink that followed as being so bad, they couldn't cut their way to a balanced budget.

"It's a very potent illustration, when you get really conservative, anti-tax lawmakers finally coming to the breaking point to raises taxes to stop the bleeding," says Goossen.

Goossen served as the Kansas state budget director for a dozen years. He says the state's budget crisis led to a record-long legislative session, ending in a record-high sales tax – which also applies to food – and a 50-cent hike in cigarette taxes.

West Virginia's Select Committee on Tax Reform is meeting now, but has yet to release any proposals.

Three years ago, Kansas Gov. Sam Brownback said eliminating that state's income tax would be "a shot of adrenaline into the heart of the Kansas economy." But Goossen says to his knowledge, cutting taxes has never increased revenue.

Further, he adds, there's no indication the Kansas tax cuts have sparked more business activity or hiring. Instead, he says, Kansas' economy is growing now, slowly.

"But not more than surrounding states, which did not cut taxes," he notes. "Growth has been below the national average. There's no noticeable boost."

The Kansas Legislature used a number of emergency measures before resorting to sales and tobacco taxes. It slashed spending, took money from the state highway fund, and sold bonds to fund state pensions.

Goossen says there are signs that the crisis, plus cuts to education and infrastructure, may hurt the state's business climate.

Dan Heyman, Public News Service - WV