KEPC UPDATE: “dynamic scoring,” response to cuts lukewarm, OK tax cut may fail, correction, About Bob

In this issue …

  •  Administration’s “dynamic scoring” implies low growth
  • Business response to tax cuts appears lukewarm
  • Oklahoma income tax cut may fail
  • Correction
  • About Bob

 

Administration’s “dynamic scoring” implies low growth

At the ceremony where  Governor Brownback signed the large income tax cut bill Tuesday, officials once again circulated “dynamic scoring” documents predicting the tax cut will add 23,000 new Kansas jobs by 2020, over and above normal growth.  Administration officials also indicated their analysis showed 35,000 people will move to Kansas as a result of the tax cuts by 2020.

A review of Kansas labor and census information strongly suggests such growth would be extremely low by historic standards and contradicts the administrations claims that the legislation will be “a shot of adrenaline into the heart of the Kansas economy.”

Current Kansas employment in April was 1,357,100, according to the Kansas Department of Labor.  An addition of 23,000 new jobs would be less than 1.7%.

In fact, a May 18 news release by the Labor Department said Kansas job growth was over half the touted 23,000 new jobs in just one month:

“Private sector employment grew by 13,900 jobs since March 2012, a 1.3 percent increase. These gains were caused by seasonal changes, showing a pause in the overall improvement of the labor market.”

Here’s how Kansas employment grew in the five year period after the September 11th downturn and the beginning of the Great Recession in 2008.  Figures come from the Kansas Department of Labor web site.

2003-2004                   11,800

2004-2005                   8,100

2005-2006                   20,700

2006-2007                   26,200

2007-2008                   10,600

That’s an increase of 66,800 jobs in the period, or 5% growth of employment before the recession hit.  An additional 23,000 jobs over the next seven years would certainly be welcome, but it’s hardly “a shot of adrenaline” compared to what Kansas has been able to do in a normal recovery.

So, what about the projection that Kansas will add 35,740 new residents?

Kansas current population, according to the U.S. Census Bureau, is 2,871,238.  The addition of 35,740 new residents by 2020 would only be a 1.24% increase.

According to U.S. Census Bureau estimates, Kansas beat that percentage population growth in eight of the ten years of the decade from 2000 to 2010.

Here are the estimated Kansas population growth rates from 2000 to 2010.

2000                8.5

2001                0.5

2002                0.9

2003                1.2

2004                1.6

2005                2.0

2006                2.5

2007                3.2

2008                4.0

2009                4.8

2010                6.1

Kansas population grew by 164,294 during the decade beginning in 2000.

That’s 6.1 percent.  An additional 1.24% increase in population would be welcome, but it’s hardly “a shot of adrenaline into the heart.”  Maybe more like a cup of regular coffee.

 

Business response to tax cuts appears lukewarm

The headline in the Business section of the Wichita Eagle Thursday morning was contradicted by the story:  Kansas small-business owners say elimination of income tax is a big help.

The actual story seems to indicate a tepid reaction to the tax cut.  An accountant points out the downsides, including the fact that a state tax cut will increase federal taxes.

A pharmaceutical company says the lower income taxes will not create more jobs at his firm.  “Tax policy doesn’t affect when we hire,” said Brian Williamson, president and CEO of JCB Laboratories.  “We’re hiring when the business dictates we need to hire.”

The President of the Wichita Independent Business Association, Tim Witsman, said the cuts are helpful to small business, but other variables have a significant effect on job creation.  Witsman was the first President of the now-defunct Kansas Inc., the state’s economic development research agency.

Read the full story here.

 

Oklahoma income tax cut may fail

Oklahoma law requires the legislature to complete its work by 5 p.m. on Friday of this week, and it’s looking more like Governor Mary Fallin’s call for an income tax cut will not happen this year.

There are not enough votes in the Oklahoma House to support a previously agreed to proposal.  The agreement fell apart after the Oklahoma Tax Commission released information showing 24% of tax filers would have an increased tax liability.

The Speaker of the Oklahoma House of Representatives, Kris Steele, says the House has kept tax cuts alive by offering up an alternative proposal.  The Senate and Governor Fallin are resisting what they consider a lesser offer.

Correction

In a previous KEPC Update, our report on education funding erroneously implied that a bill to increase local option budget authority for school districts might have passed.  It did not.

The legislature added $40 million from the state general fund to the base state aid per pupil.  There is no local taxing authority expansion.  We regret the misunderstanding.

About Bob

Like so many others, we were shocked and saddened by the tragic death of Representative Bob Bethell (R-Alden).  Bob was a moderate Republican and a great friend of the Kansas Economic Progress Council.

Tagged by many as a RINO (Republican In Name Only), he proudly displayed a mounted fake rhinoceros head on the wall of his office.  He wore a Mickey Mouse tie every day, yet was deadly serious in his concern for those who suffered from health problems, poverty, and disability.

Respected by all, he even officiated at the funeral of Representative Judy Showalter, a Winfield Democrat, in 2005.  Knowing she was dying of cancer, Judy asked Bob to preside at her service, and insisted that he wear one of his signature Mickey Mouse ties.

His own funeral Thursday at Sterling, Kansas was attended by what appeared to be most of the legislature, Republican and Democrat.  Many wore Mickey Mouse items in his honor.

Speak Your Mind

*