A Special Note on the Recent Veto Override

PittWell.jpgLast week, I had the opportunity in the legislature to partially roll back Governor Brownback's damaging policies. We have been paying our electric bills with credit cards long enough; we had to correct one side of the equation to slow the continued borrowing that saddled taxpayers with more and more debt.

When I was elected to be our Representative at the state level, I ran on a platform of fiscal responsibility. We have had years of borrowing that are slowly bankrupting the state's funds. Our credit rating had fallen repeatedly in the past few years and the budget outlook was bleak. The Kansas Legislature has been cutting state spending since the Great Recession in 2008. For nearly 10 years, budgets have been passed reduced state funding well beyond cutting waste. In the four years since Governor Brownback’s failed tax plan was passed in 2012, they were now at the point where not only was excessive spending cut, but essential programs were destroyed as well.

The Kansas Legislature has had four years to fix our budget and develop a solution that works for all Kansans, but were unable to do so until this year.

As I campaigned last year, I let people know there was going to need to be more revenue in addition to looking for efficiencies. These are tough times at the state level. There was broad agreement that the Brownback 2012 tax cuts went too far, but with the Governor in denial, the Legislature had to work in a bipartisan way to a solution full of compromise.

 

The governor and his supporters have preached spending cuts, yet ironically as we debated the budget in the House, only Democrats offered spending cuts. That said, during the session, new spending was rarely approved as everyone was aware of our strapped financial situation.

The Supreme Court has mandated we adjust our education finance policy which we have done. Going from what's known as a “block grant” to a per pupil formula means we will see hundreds of thousands more in Leavenworth and Ft Leavenworth because of our enrollment changes since funding was frozen. But, as verified by the special lawyer hired by the Legislative Republican leadership, the courts also mandated more funding per pupil to be focused on the lower performing kids to make the funding formula constitutional. More money was needed, which meant our budget was underfunded.

As we considered different tax plans, I was always aware that the median household income of Leavenworth is $54k as well as other challenges that working families and our communities are facing. The following are some of the key points of the discussion that happened in Topeka this spring, and how I arrived at my conclusions as your State Representative.

  • Conservatives tended to push a two tier or flat tax plan, but I voted against these because they tended to hurt the lowest income earners and did not raise enough revenue to get us out of our budget hole. 
  • We did eliminate the LLC loophole that allowed the wealthiest to avoid paying taxes. The tax cuts that were a central part of the Brownback Tax Plan were designed to allow for more job growth, but the reality was that this was simply not the case. This part of the Brownback Tax Plan has broadly been seen as a failure.
  • Others pushed tax plans that targeted service providers like plumbing, hair dressers, towing and cleaning companies, but didn't target higher end service providers like lawyers and accountants. These taxes would have affected working class families and with so many of Leavenworth's residents involved in providing services due to the high number of rentals we have. I thought these would unfairly affect our district. Additionally, these proposed new raised taxes would have only provided around $50 Mil in revenue compared to the $500-600 Mil we needed.
  • The Governor was pushing raising cigarette taxes by $1 a pack, doubling the retail alcohol taxes and putting 10 cent per gallon gasoline taxes in place. Once again, being on a border town that literally has a bridge to Missouri, these taxes negatively affect our district's business, just like the big sales tax increase put in place did a couple of years ago by my predecessors. 
  • I fought to have a lower tax rate put on working families, while the Senate conservatives pushed to have the lowest possible rate on the wealthy. I even presented my own tax plan that would have raised the amount needed and still would have had lower rates for those making $30-$100k. But to pass through the legislature, a more compromised plan had to pass. That's the nature of compromise: we had to work together to get a little bit of something for everyone, yet everyone had to give up things.
  • If we were going to raise income tax rates, I knew that I had to fight for the restoration of some of the tax credits and deductions which Brownback's backers have stripped away from the working and middle class. We reinstated a tax credit for children from the final amount owed. We have put deductions back in place for mortgage interest for people buying a house. We have also allowed property tax to be deducted from income tax so that we are not being double taxed on that. 

As a relevant Leavenworth example, a family of four with $60k in income after standard deductions with current rate increases plus the addition of the child care credit pays $92 less than they currently do. With this new plan, they pay $348 less than they did in 2012. If that same family makes $100k, they will pay about $250 more per year—probably less due to us reinstating the mortgage interest and property tax deductions. Importantly, an individual with LLC income of say $1 Million will now actually pay taxes on that income like everyone else.

This solution was passed with a collaboration of legislators from across the political spectrum. It is a healthy compromise that is not perfect, but will begin to put Kansas back on track. Governor Brownback did not approve of our balanced and compromised solution, and vetoed our solution. The veto was soon overridden by the Kansas Legislature, and included a wide political spectrum of Democrats to conservative Republican leadership. 

I do believe Gov Brownback relied too heavily on tax structures to ensure growth where there are many factors beyond taxes. It takes many initiatives at the state and local level to aid in economic growth...and there are still no guarantees as it takes private sector buy-in to drive real growth.

The day after we overrode that Governor Brownback’s veto, our state’s credit rating was immediately raised to 'stable' vs 'negative' by Moody's. That means our state and local bonds won't be so expensive. It also shows how people outside our state felt Brownback's policies were putting the state finances in severe risk and how important it was to correct that situation. Yet there is more to be done. We must look at ways to make government more efficient, to better weather the agribusiness ups and downs and look for opportunities to grow our state's economy.

I will continue to look for efficiencies. I am optimistic that technology offers a way to gain efficiencies for our state, especially as we look for ways to make education more efficient. I look at ways other rural areas utilizes technology. We need to change something. These types of efficiencies take time to find and implement, but some are underway and I will continue to use my specialized background in this area to help the state of Kansas.

Plan on another update or two in the near future that will summarize this year's legislative session. Be sure to sign up for email updates at votepittman.com.


For Leavenworth,
Rep. Jeff Pittman