The budget and large tax increase passed by the 2017 Legislature will increase General Fund spending by nearly $500 million between FY 2016 and FY 2019, topping out at another new record of $6.613 billion.
Contrary to many claims over the last few years, General Fund spending actually increased several times since tax cuts went into effect in 2013 and assuming inflation continues at its current pace, spending will consistently be $1.3 billion higher than long term inflation (BLS Consumer Price Index for Midwest Urban Cities on a fiscal year basis).
Population growth may account for some spending changes, particularly in demographics such as school-aged children and seniors on social services, but infrastructure and other fixed costs of government need not change proportional to population. But even if one adjusts for inflation and full population growth, Kansas is still budgeting to spend $625 million above that adjusted level in FY 2019. General Fund spending $2,050 per capita this year by adjusting for inflation, but Kansas plans to spend $2,263 per capita based on consistent population growth.
General Fund spending by agency is available here, going back to 2005.
The amount that government taxes is determined solely by the amount it chooses to spend to provide services. Every state provides the same basket of services (education, highways, social services, etc.) but some states do so at much lower costs. For example, the states that tax income spent 42 percent more per-resident in 2015 than those without an income tax; Kansas spent 27 percent more. States without an income tax have superior long term growth in jobs, wages & salaries and Gross Domestic Product and given that they also gained population from domestic migration, it appears that citizens find the lower cost services to be a good value proposition.
The same is true of the ten states with the highest and lowest combined state / local tax burden (as ranked by the Tax Foundation.) It’s also noteworthy that states without an income tax and those with the lowest combined tax burden also have lower local taxes per resident, refuting the notion that states with low taxes merely shift the burden to local government. Data for each state can be found here; job growth data in the above table has been revised to reflect new BLS data released since publication of the 2017 Green Book.
Taxes aren’t the only contributing factor to these disparate economic growth patterns but the ability to tax less leaves more money in the hands of taxpayers and enhances economic growth.
The FY 2016 Comprehensive Annual Financial Report (CAFR) from the Kansas Department of Transportation (KDOT) shows spending on transportation projects in 2015 and 2016 was the highest over the last ten years.
Excluding debt service and administration, spending was $1.105 billion in FY 2015 and $1.069 billion last year. The condition of Interstate highways and bridges remain above minimum KDOT standards and are consistent with previous years, and other state highways are actually in the best condition since at least 2009. It’s also noteworthy that Reason Foundation recently rated Kansas as having the 3rd best highway conditions in the nation.
Is it true that making small businesses pay income tax would allow a lot more spending on education, highways and other services?
The Department of Revenue says reinstating the tax on pass-through income and their loss carryforward capability would generate between $195 million and $200 million. But as explained here that would only help get the state’s ending balance up to the statutorily-required level for at least two years, so there would be nothing left to pay for additional spending.