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Kansas’ Credit Rating Goes Down the Tubes

The fiscal picture in Kansas continues to darken as the state reels from Governor Sam Brownback’s budget-busting tax cuts. Governing magazine reports:

A major rating agency on Tuesday downgraded Kansas’ credit rating for the second time in two years because of the state’s budget problems.

S&P Global Ratings dropped its rating for Kansas to AA-, from AA, three months after putting the state on a negative credit watch. S&P also dropped the state’s credit rating in August 2014. […]

Kansas has struggled to balance its budget since Republican Gov. Sam Brownback successfully pushed the GOP-dominated Legislature to cut personal income taxes in 2012 and 2013 in an effort to stimulate the state’s economy.

Brownback rode the Tea Party wave to become governor of Kansas in 2010, promising to make it a national example for the promise of doctrinaire small government conservatism. But he never had a plan to pay for the front-loaded tax cuts that were supposed to grow the economy and force the government to shrink.

As we’ve said before, Brownback’s “starve-the-beast” approach doesn’t make much sense for Republican policymakers in deep red states. First of all, the biggest obstacles to growth in Republican dominated states often have more to do with regulations—like licensing, zoning, and tort laws—than with punitive tax rates. Moreover, Republican-legislatures and governors should be able to promptly implement cost-saving measures like public pension reform. Serious state leaders should focus on stimulating growth and cutting costs, and then on returning the dividends to taxpayers in the form of lower tax rates.

The reverse approach—front-loading tax cuts, and hoping spending will shrink down the line—might make sense in certain circumstances. But as Sunflower State Republicans are learning the hard way, it also runs the risk of further undermining vital public services, ballooning the debt, and raising borrowing costs. That’s not an especially appealing model for reform.

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  • JR

    “Serious state leaders should focus on stimulating growth and cutting costs,” And how does one go about that, exactly? What we are seeing is a public union cartel that has grown outside of control of our political class. It only gets stopped by one thing and one thing only: arithmetic. See Detroit.

    • Ofer Imanuel

      Look at Scott Walker accomplishments in Wisconsin, or even better, Mitch Daniels in Indiana.

      • JR

        I agree. You have to deliver the goodies to the voters by busting the public union cartel as much as possible. They went about it in the wrong order of steps in Kansas.

        • f1b0nacc1

          Precisely right. I live in KC (about 100 meters on the MO side of the border, as it happens), so I have a front row seat to this. Unfortunately for Brownback (who isn’t my favorite guy, to be honest with you) he hasn’t done anything to control spending, and to deal with the Topeka mafia, the RINOs and Democratic bitter-enders who use the courts to override any real fiscal discipline.. Tax cuts without spending cuts don’t help, and may hurt, and Brownback hasn’t shown the will or the skill to work at cutting spending.

          With all of that said, don’t bet on KS going blue anytime soon. Most of what you hear coming out of KS comes from either Overland Park or Wichita, which is something like getting your news about US politics listening exclusively to NYC and SF….

          • FriendlyGoat

            Come now, Overland Park and Wichita are red, not blue. Nothing in Kansas went for Obama in 2012 but the Lawrence area and Wyandotte County.

          • f1b0nacc1

            Given how far off the mean Obama was, I am unsurprised, but we are talking about state reps, not national. If you know anything about KS politics, particularly behavior of the state govt, you know that Wichita is the most liberal region of the state, and OP is a close second. Wyandotte county county is what you would expect from the KC KS area…

          • FriendlyGoat

            My recollection is that the same two counties were blue in a sea of red at the election of George Bush in 2000—-maybe Topeka too at that time, but I don’t think Wichita was. As much as O.P. may contain some liberal talk, there is so much money sloshing around Johnson Country that tax cuts are always in high demand and O.P. is always red. Yes, I’m familiar with them. Once lived there a long time ago.

          • f1b0nacc1

            The 2000 election represents something of a special case, as it was extremely close, and even narrow margins might ‘cross-over’…all the more reason to support my argument, as it happens.

            I live cheek by jowl with OP (about 100 meters over the State Line around 97th street, so I am next to Leawood, if you remember KC at all), and am in there 3-4 times a week. The place is an odd mix of evangelical christians and liberal migrants from other states who came here for the business HQs that infest the place. Tax cuts aren’t terribly important in OP, but they do care intensely about their school systems, so tax rates are VERY high compared to neighboring counties. In point of fact, that is why I ended up across the street from KS…I save quite a bit of money living in MO (which has horrible schools, but as a childless old-fart, I am not concerned).

        • Rodney

          He must have been a part of the GW Bush school of governance. Tax cuts without corresponding spending reductions didn’t work too well for him, either.

  • FriendlyGoat

    The “problem” with this assessment for conservatives is that you cannot run in a state election on spending cuts BEFORE tax cuts. People will not vote for it. You cannot go in saying that you are going to cut the legs out from under all kinds of things and then—–maybe—-do tax cuts later. TAI knows this and is just spinning the best idea they can think of for the avoidance of reality. Republicans lied to Kansas and really messed up the state.

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