Pseudo-conservatism: 2 GOP governors ravage state budgets

Two prominent Republican governors have come under fire in recent years for pushing ultra-conservative agendas in states that were initially enthusiastic about pursing small government, low tax policies in the hopes of attracting small and corporate businesses.

Former Louisiana Gov. Bobby Jindal and current Kansas Gov. Sam Brownback were elected at the dawn of the Tea Party movement in 2008 and 2010, respectively. With the goal of turning their states into conservative laboratories, both successfully pushed through record breaking individual and corporate tax cuts.

Kansas’ budget blueprint “is exactly the sort of thing we want to do here in Washington, but can’t, at least for now.”

– Sen. Mitch McConnell (R-KY)

In order to balance their budgets, as required by the Louisiana and Kansas state constitutions, both legislatures made significant reductions in funding of education, health care and welfare programs.

Kansas, for example, cut education expenditures by $200 million, privatized Medicaid and reduced welfare benefits. This resulted in 1,400 disabled state residents losing government-sponsored health insurance and six schools districts having to close before the end of the school year.

Despite these relatively large reductions, Kansas sustained a $688 million loss in revenue after the first full year a second round of tax cuts were implemented in 2013. The state budget office originally predicted the tax breaks would raise an additional $323 million through increased employment and new businesses.

In 2015, the Kansas legislature made a halfhearted attempt to increase revenue through raising the sales and alcohol tax, even as the state’s highest individual tax rate is set for another reduction in 2017 to 3.5 percent. At the start of Brownback’s first term, the top rate was 6.45 percent.

In addition, more than 100,000 small businesses have had their tax burden reduced to zero.

Even non-small business owners have taken advantage of the tax-free policy by changing the incorporation status of their companies, reducing their personal incomes to zero and paying themselves with company revenue which now enjoys tax-exempt status.

Kansas’ current fiscal year budget was projected to yield a $78 million deficit after being marked up by state budget experts, but as of November 2015 the state is on track to fall short by $354 million due to shortfalls in sales tax revenue.

Neither has Brownback’s conservative initiatives spurred the economic growth which he touted during his 2014 reelection campaign. In August 2014, the governor a set a goal of adding 25,000 jobs per year through 2018. Since then, only 1,600 additional jobs have been created in the Sunflower State.

In fact, during the period between 2010–2012 and 2013–2015, job growth slowed from 1.1 percent to .1 percent and income growth decreased from 6.1 percent to 3.6 percent.

“The time has come to cut every government funded entity. The reduction will be small when equitably spread across the board.”

Susan Wagle, President of Kansas Senate

Cuts in state education expenditures have caused an increased number of students per classroom, the elimination of art programs and more out-of-pocket costs for parents to send their children to kindergarten.

In Louisiana, the budget crisis is even more acute.

In an attempt to appeal to conservatives nationally with an eye on the White House, former governor Bobby Jindal managed to squander a $1 billion surplus upon taking office at the start of 2009, leaving newly elected Gov. John Bel Edwards with a $2 billion projected deficit in fiscal year 2017.

Signing the largest tax cut in state history at a cost of $800 million per year, Jindal increased corporate deductions and instituted a tax amnesty program which allows the state to receive disputed tax payments up front at reduced rates.

Louisiana corporations have received $210 million in net tax credits and subsidies in 2016 and a total of $229 million since November 2015.

The massive state budget gap had forced Louisiana’s legislature to cut 44 percent from public education funding since 2009.

However, Gov. Edwards was handed a $940 billion deficit for the rest of fiscal year 2016, requiring a special legislative session which was held on March 9.

$30 million worth of obligations are still unfunded to-date and a $70 million budget gap remains, even after passing a litany of tax increases to the tune of $400 million and instituting $160 million in additional spending cuts.

In total, $1.5 billion in new taxes are projected to be collected over the next year and a half, including a one percent sales tax increase and additional taxes on cigarettes, alcohol, rental cars, cell phones, landlines and online hotel reservations.

The legislature also suspended an insurance company tax credit, will implement a sales tax on all online purchases and approved the transfer of money from the state’s “rainy day” and “non-coastal BP payments” funds to help close the biggest budget deficit in Louisiana history.

Despite these emergency measures, the fiscal year 2017 budget is still $800 million short of necessary funding.

“This was years of mismanagement by a governor who was more concerned about satisfying a national audience in a presidential race.”

– Jay Dardenne, Republican Lieutenant Governor of Louisiana (2010–2016)

One more special session will be required to close the remaining Louisiana’s 2016 shortfall, but state law requires that the meeting cannot commence until June 14 at the earliest.

The lesson learned from the examples set by Kansas and Louisiana may be one of fiscal responsibility, which can apply at the national level.  Two candidates currently running for the GOP presidential nomination, Ted Cruz and Donald Trump, have proposed tax plans which would decrease revenue by up to $1 trillion per year over the next 10 years.

With entitlement and military spending being nearly impossible to cut in Washington’s gridlocked political climate, significantly reducing federal revenues will preserve neither prosperity or security for America’s future generations.

 

[New York Magazine] [Wall Street Journal] [New York Times] [AP] [Kansas City Star] [New Republic] [Washington Post] [The Times-Picayune] [WDSU-New Oreans] [Photo courtesy Reuters/Brian Snyder via Salon]