KEPC UPDATE: Moody’s warning, NY Times, cash vs. confidence, Sen. Haley

In this issue …

  • Moody’s warns about Kansas tax and government cuts
  • NY Times features Kansas vs. Maryland
  • Lots of cash, no confidence
  • Sen. Haley is a Pro-Jobs Transportation Leader

 

Moody’s warns about Kansas tax and government cuts

In two separate reports recently, Moody’s, the bond credit rating organization, has expressed concerns about the Kansas income tax cut legislation and slow economic growth in the state caused by shrinking government payrolls.

In a June 13 Moody’s report on the income tax reduction bill, Moody’s says the cuts will have a manageable impact on the 2013 budget, but a more serious problem after that.  Their forecast:

“No improvement in economic growth as a result of the tax cuts is assumed by the forecast, although improved economic growth is the legislation’s policy goal.”

“Unless it is able to implement corresponding spending cuts or achieve faster economic growth than currently anticipated, the state forecast shows out-year operating budget deficits and depletion of fund balances, which would cause downward credit pressure.”

Here’s an excerpt from a July 5 Moody’s report on the overall economic health of Kansas:

“A shrinking public sector poses the biggest hurdle to a more solid recovery. Further, lackluster performance in goods production has kept the state’s growth below average.”

“Prospects of additional public sector retrenchment will remain the biggest threat to the recovery. Federal government payrolls were hit especially hard last year, with state and local employment declines not too far behind.”

 

NY Times features Kansas vs. Maryland

Wall Street isn’t the only place in New York that’s noticed Kansas income tax cut.  A July 11 story in the New York Times compares Kansas (which has cut income taxes) with Maryland (which has raised them) and some other states.

Part of the story quotes Governor Brownback:

Mr. Brownback said that he initially had hoped to pay for some of the lost revenues — which are expected to reach a little over $800 million, or 13 percent of general fund revenues, next year — by ending a number of popular tax deductions, and by phasing in the cuts slowly. But he could not find support for that, so, even as other states are beginning to add spending again, he has been looking for savings and more cuts to offset the projected loss in tax revenues.  “We are going to be going through everything with a fine-tooth comb,” he said.

Read the full story here.

 

Lots of cash, no confidence

Companies are continuing to hold onto their cash rather than invest in new equipment or new employees, unsure of what will happen to the economy.

That’s the conclusion of a survey of private company Chief Financial Officers by the American Institute of Certified Public Accountants.

The survey, which was released June 7, surveyed 1,250 senior executives.  Of those, 36 percent said cash assets have been increasing from the first quarter to the second quarter of 2012.  The same percentage also said they were up at least 31 percent in cash and liquid assets from the second quarter last year.

However, 24 percent of those responding to the survey said they were uncertain about using the excess cash.

 

Sen. Haley is a Pro-Jobs Transportation Leader

We recently reported that Economic Lifelines named 68 Kansas legislators “pro-jobs/transportation leaders in recognition of their strong support for transportation’s role in creating jobs and economic development.”

Their selection was based on votes taken to support the Kansas T-WORKS program and against efforts to take funding from the program.

Economic Lifelines inadvertently left Senator David Haley (D-Kansas City) off the list and we repeated the error when we re-published it.

Thanks to Senator Haley for his strong support of transportation.

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