Ever since the 2010 election of former Senator Sam Brownback as Kansas’ governor, we have heard a more or less continuous howl of outrage from the left. Both in-state liberals (fairly few in number, as Kansas is one of the reddest of red states) and out-of-staters (who already despised Brownback for his religious fervor and his hardline conservative stances, particularly on social issues) have been quick to jump on Brownback for his economic and fiscal policies, which were based on tax and spending cuts.
“Under Sam Brownback, Kansas is mired in a self-created fiscal hell” is a more or less typical headline from a Kansas City Star editorial of July 1, 2015. “Sam Brownback’s Kansas Disaster is Getting Even Worse” read an only slightly less hyperbolic headline from The Washington Monthly last year. Mother Jones’ Kevin Drum took a Socratic approach with “Q. What’s the Matter with Kansas? A. Sam Brownback” earlier this year.
I don’t live in Kansas, and I don’t care much for Governor Brownback’s form of social conservatism. I thought it worth a look, however, to see how bad things really are in Kansas. To recap, Gov. Brownback’s administration dropped the top tax rate in Kansas from 6.5 percent to 4.6 percent, cut sales taxes, and eliminated a business ownership tax. The stated purpose was to encourage growth and entrepreneurship. Governor Brownback himself called it “a real live experiment” when the cuts were passed into law.
Suffice it to say, things didn’t work out as planned. Tax revenues plummeted, forcing spending and service cuts and the reinstatement of some taxes. State bond and credit ratings have been cut and the state has resorted to some questionable tactics to fill budget holes and pay outstanding bills. Gov. Brownback was re-elected in 2014 (by just under four percentage points) but his approval ratings are floundering in the 25 percent range.
So, the Kansas economy is a disaster, with soaring unemployment, shrinking GDP, and climbing poverty levels, right?
Well, no. This chart from the St. Louis Federal Reserve shows steady, albeit modest GDP growth in Kansas since Brownback took office in 2011, from about $137 billion to about $147 billion annually. During that time, the unemployment rate has ticked down from 6.8 percent to 4.1 percent (the current national unemployment rate is 4.8 percent). This is happened while energy prices collapsed (Kansas is a major oil and gas producer) and commodity prices dropped (Kansas is the nation’s seventh-largest agricultural producer).
Liberals like to compare and contrast Kansas’ woes with the good fortunes of California, whose Governor Jerry Brown enacted a whopping 13.3 percent top tax rate to deal with the budget crisis bequeathed to him by the spectacularly inept back to back administrations of Gray Davis and Arnold Schwarzenegger. California, buoyed by the tech industry, has indeed enjoyed resurgent growth. But consider some of the basic economic indicators for each state:
- Unemployment rate: California’s is 5.5 percent; Kansas’ is 4.1 percent.
- Poverty rate: California’s is 15.7 percent; Kansas’ is 13.6 percent.
- School rankings: California schools are ranked 40th; Kansas schools come in 20th.
- 2014 expenditure per public school student according to Governing magazine: California — $9595; Kansas — $9972
- Median household income: California – $61,489; Kansas — $51,872
- Median home price according to Zillow: California –$466,900; Kansas — $120,800
So California’s top tax rate is three times greater than that of Kansas, more of its citizens are impoverished, its schools are much worse, and a house in California costs four times what a house in Kansas costs. Which state is the success story here? Whose citizens are getting the better deal from their state?
From the safe vantage point of my home in Virginia, Governor Brownback’s experiment with the Kansas economy seems overly ambitious and hastily executed, with not enough planning for the unforeseen consequences of major tax cuts. From the same vantage point, however, Governor Brownback’s critics from inside and outside the state seem to be more critical of the ideology behind the tax cuts (Brownback said he wants Kansas’ economy to be more like that of Texas) than of their actual impact on the state. What’s more, there are signs that the tax cuts are having some positive effects. Net new business formation, for example, increased by five percent in Kansas in 2015 over the previous year.
Texas is a low-cost, high-growth state and Kansas (for now) is a low-cost, low-growth state. With its climate extremes and its shortage of beaches, mountains, and hip urban centers, Kansas is unlikely to attract the growth industries of the future. But the state, overall, is in reasonably good shape, especially in comparison to blue states such as California and Illinois. Its residents are smart and industrious, and the state’s budget shortfall can be solved. In short, the sky isn’t falling on Kansas, despite what liberal commentators may predict.