Brownback Defends Tax Cuts to Missouri Legislators March 4, 2015

(AP) – Kansas Gov. Sam Brownback is touting to Missouri lawmakers what he says is right with his state because of new tax policies.

Brownback on Wednesday spoke with some Republican lawmakers during a private luncheon at a Jefferson City hotel.

The event was sponsored by business groups and the conservative group Grow Missouri, which is backed primarily by wealthy political donor Rex Sinquefield.

Brownback’s statements come as Kansas faces a projected budget shortfall of nearly $600 million after the Republican governor successfully pushed lawmakers to slash personal income taxes in 2012 and 2013.

Brownback says despite the shortfall, he’s starting to see “the seeds of growth” in Kansas. He also says he will balance the budget as required by the state’s constitution.

Moody’s Says Kansas May Need more Tax Cuts May 14, 2014

(AP) – Moody’s Investors Service says Kansas will need to make more spending cuts to offset tax cuts that have sharply reduced state revenues.

Moody’s downgraded Kansas bonds last month on the same day the state announced April revenue collections fell $93 million below estimates. Moody’s says most of the state’s revenue shortfall was because less money was collected in individual income taxes.

The Lawrence Journal-World says a Moody’s report issued Tuesday suggests more spending cuts will be difficult to achieve because of court-ordered school funding, federal mandates in programs like Medicaid, and legal requirements to fund the state pension system.

But Gov. Sam Brownback blamed the revenue decrease on President Barack Obama and said wealthy taxpayers filed their capital gains income in 2012 tax year instead of 2013.

Kraus’ Scaled Back Tax Cut Bill In Mo. Senate March 27, 2014

(AP) – Missouri’s Republican-led Senate endorsed an income tax cut plan Wednesday that could eventually waive a little less than $500 million of revenues annually, an amount about half the size as originally proposed with a later effective date.

Republicans, and even some Democrats, described the plan as a more moderate tax cut. Yet it still doesn’t include all of the contingencies that Democratic Gov. Jay Nixon has said would be necessary to avoid his veto pen.

Legislative leaders have made an income tax cut a priority in 2014, after they were unable to override Nixon’s veto of their first attempt last year. Nixon has expressed concerns that a tax cut could drain money for schools and other state services.

Republican lawmakers have pointed to recently enacted tax cuts by Missouri’s neighbors, particularly by Kansas.

“We’re falling behind other states. We’ve got to do something to be more competitive,” said Sen. Will Kraus, a Republican from Lee’s Summit who is sponsoring the legislation.

Missouri Tax Reform, ‘The Sequel’ Starts Again January 17, 2014

(AP) – Kansas is again being held forth as the prime example in Missouri’s renewed debate over whether to cut income taxes.
But rather than being touted primarily by tax-cut proponents, Kansas also was cited Thursday by tax-cut opponents concerned about the potential for falling state revenues and inadequate school funding.
A Republican-led Senate committee heard testimony on a trio of proposals – one cutting taxes only on business income, another reducing the individual income tax rate and a third phasing in tax cuts for both businesses and individuals.
The panel is expected to advance some combination of those proposals in coming weeks as majority-party Republicans try again to enact an income tax cut after Democratic Gov. Jay Nixon vetoed last year’s legislation.
“We are here for the sequel. Hopefully, it’s better than the original in the outcome,” Sen. Eric Schmitt, a Republican from suburban St. Louis who is sponsoring two of the bills, said as the Senate Ways and Means Committee began its deliberations.
As they did last year, lobbyists for business groups again pointed to tax cuts in Kansas and other neighboring states.
Over the past two years, Kansas has exempted the owners of 191,000 businesses from income taxes and sliced tax rates for individuals. Six of Missouri’s eight neighboring states enacted some sort of tax cut last year.
“We are surrounded by states that are beckoning our businesses and citizens to come to them,” said Woody Cozad, a lobbyist for the Gate Way Group, which represents various business interests and mega-political-donor Rex Sinquefield.
Missouri lawmakers are particularly concerned that businesses in the Kansas City area will relocate across the state line to take advantage of the new tax savings.
But opponents of an income tax cut said Missouri already is ahead of Kansas in economic indicators and could jeopardize funding for state services if it followed Kansas’ example.
Kansas revised its financial outlook downward in November. It forecasts that its 2014 general revenues will fall 7.6 percent short of the previous year and 8.7 percent shy of what the state collected in 2012.
The falling revenues have made it more difficult for Kansas to recover from previous education funding cuts that have left basic per pupil aid 13 percent lower than its peak in 2008.
Although Missouri hasn’t cut public school funding, its basic school aid is about $600 million short of what’s called for under state law. If Missouri income taxes are cut, it “may be utterly impossible” to catch up on school funding, said Otto Fajen, a lobbyist for the Missouri chapter of the National Education Association.
Legislative researchers project that a gradual 50 percent tax deduction for business income, which one of the bills proposes, could eventually cost the state $148 million annually.
But the Missouri Budget Project, a St. Louis-based nonprofit that analyzes fiscal issues with an eye on the poor, puts the potential cost at more than $500 million. The costs could be higher for other
A bill by Sen. Will Kraus, R-Lee’s Summit, would reduce the individual income tax rate to 5 percent, create a 50 percent deduction for business income, expand deductions for low-income individuals and exempt corporations’ first $25,000 of income from taxes.
It’s projected by legislative researchers to cost $945 million annually when fully implemented; the Missouri Budget Project puts its eventual cost at $1.8 billion. Tax-cut supporters contend the revenue loss could be made up at least partly by expanded payroll and sales taxes generated by businesses that use their tax savings to hire additional employees and expand operations. But Amy Blouin, executive director of the Missouri Budget Project, cast doubt on such assertions. She estimated Missouri businesses would have to create about 250,000 jobs to offset a $500 million tax cut. “We would have to practically import people from other states to create that level of growth,” Blouin said.

Kansas Lawmakers May Take Wait-and-See Approach to More Tax Cuts December 29, 2013

(AP) – Kansas officials are expecting policymakers to take a wait-and-see approach to taxes during the 2014 session, content to let the changes take hold and build on anecdotal evidence of economic growth.

Gov. Sam Brownback and the Republican-controlled Legislature focused during the 2012 and 2013 sessions on eliminating income taxes for some 200,000 businesses and adjusting the rates for individual income taxpayers.

Brownback and his supporters say the early signs are good, but it will take time to know for certain.

Democrats say the cuts will result in Kansas having a budget shortfall within five years. Current legislative research projections suggest that’s true and the impact will be front and center when Brownback seeks a second term in 2014.