{"id":54956,"date":"2015-06-08T10:34:31","date_gmt":"2015-06-08T16:34:31","guid":{"rendered":"http:\/\/www.nmpolitics.net\/index\/?p=54956"},"modified":"2015-06-16T10:18:10","modified_gmt":"2015-06-16T16:18:10","slug":"kansas-could-have-learned-from-nm-to-avoid-economic-tornado","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2015\/06\/kansas-could-have-learned-from-nm-to-avoid-economic-tornado\/","title":{"rendered":"Kansas could have learned from NM to avoid economic tornado"},"content":{"rendered":"

COMMENTARY:<\/strong> After Dorothy Gale is swept away to a magical land in The Wizard of Oz, she spends the rest of the iconic movie trying to get back to Kansas \u2014 the black-and-white Kansas of the Dust Bowl. One has to wonder, though, if she had been swept away from the Kansas of 2015 would she still be so keen to get back?<\/p>\n

\"Bill

Courtesy photo<\/p>

Bill Jordan<\/p><\/div>\n

While Kansas has recovered from the severe precipitation drought of the 1930s, it is now in the grips of a very different kind of disaster \u2014 a dehydrated state budget that\u2019s been drained of enough money to pay for vital services like education, public health, and first responders.<\/p>\n

Kansas\u2019 self-inflicted fiscal drought is due to extreme income tax cuts, which are bleeding the budget dry. The Kansas Legislature recently passed a $6.4 billion budget for the coming fiscal year \u2014 a budget, incidentally, that\u2019s not much bigger than New Mexico\u2019s \u2014 but it\u2019s now looking at an estimated shortfall<\/a>\u00a0of $765 million.<\/p>\n

More than 10 percent of the money the state has already planned to spend has simply vanished. While Auntie Em and Uncle Henry may have gotten an income-tax cut, Dorothy might be heading back to a school of over-crowded classrooms, drastically reduced learning resources, and discontinued bus service.<\/p>\n

No shot of adrenaline for the economy<\/h3>\n

Spending cuts alone are not going to cover the shortfall, so Governor Sam Brownback is now suggesting<\/a> raising sales taxes. (This is a bad idea for a number of reasons, but that\u2019s the subject for another blog.)<\/p>\n

Back in 2012, shortly after Brownback had shepherded his pet tax package through the Kansas\u00a0Legislature, he assured the people in an op-ed<\/a> that the plan would be \u201clike a shot of adrenaline into the\u00a0heart of the Kansas economy\u201d because it would spur the creation of new jobs.<\/p>\n

It\u2019s been nearly three years and it might be time for Kansas to start CPR before its economic heart is bled completely dry. Brownback would have been wise to look for a more realistic prognosis among other states \u2014 such as New Mexico \u2014 that had cut their income taxes in recent years. He might have seen that a state can\u2019t will new jobs into being simply by cutting income taxes.<\/p>\n

New Mexico, as you might recall, passed a top-heavy income tax cut in the early 2000s. Like the other five states that also slashed their income taxes during that decade, the idea was sold on the promise of new jobs.<\/p>\n

Of course, no such thing happened. Our job growth share rose by a tiny 0.6 percent. A recent report<\/a> by the Center on Budget and Policy Priorities points out that it was more likely due to the huge increase in oil and gas prices during that decade. Oil and gas prices also drove the job growth that Oklahoma saw after its big income tax cut.<\/p>\n

However, the other four states that cut taxes in the 2000s \u2014 Arizona, Louisiana, Ohio and Rhode Island \u2014 actually saw a decrease in their shares of job growth.<\/p>\n

Likewise with states that cut their income-tax rates in the 1990s and the 2010s. On average, their job growth has been weaker than for the nation as a whole. Kansas, despite its massive tax cut, has seen job growth of just 3.1 percent since its cuts went into effect, while the nation\u2019s job growth rate has been 4.5 percent.<\/p>\n

A zero-sum game<\/h3>\n

Income tax cuts are a zero-sum game when it comes to state economies. States can\u2019t spend money they don\u2019t have, so they either must cut spending (which often means cutting jobs) or raise taxes on someone else to make up for the cut.<\/p>\n

Essentially, the same amount of money that\u2019s allowed to flow into the economy by the tax cuts is taken back out of the economy somewhere else.<\/p>\n

Although New Mexico\u2019s personal income tax cuts didn\u2019t bring the state any economic benefits, at least they didn\u2019t break the bank like they have for Kansas. Again, that was due to high oil and gas prices and a strong economy.<\/p>\n

Of course, the economy and oil and gas prices have all taken a hit since then, but New Mexico policymakers are still trying to conjure up new jobs by way of magic tax cuts. In 2013 we slashed corporate income taxes. We have seen some job growth since then, but it\u2019s been almost entirely in the health-care sector because more people have health coverage thanks to Obamacare.<\/p>\n

New Mexico\u2019s policymakers need to keep in mind that neither of these tax-cut schemes have created jobs before they start to overhaul our entire tax system.<\/p>\n

Meanwhile, just like Kansas, we\u2019re collecting less and less money for critical services like education, public health, and first responders. No wonder people are leaving the state.<\/p>\n

Kansas has been losing people to other states, too. None of them are leaving by way of tornado, like Dorothy did, but most of them are probably glad they\u2019re not in Kansas anymore.<\/p>\n

Jordan is senior policy advisor\/governmental relations for New Mexico Voices for Children<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Looking at New Mexico might have taught Kansas that a state can\u2019t will new jobs into being simply by cutting income taxes.<\/p>\n","protected":false},"author":1,"featured_media":54963,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1192,16],"tags":[118,107],"class_list":["post-54956","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-guest-columns","tag-economy","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/54956","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=54956"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/54956\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media\/54963"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=54956"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=54956"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=54956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}