KEPC 2015 Legislative Positions

Following are the policy positions of the Kansas Economic Progress Council as we enter the 2015 legislative session:

The Budget

Stability in revenue and services is a strong foundation of business growth.

It is evident that the 2012 and 2013 Kansas income tax changes went too far and resulted in severe cuts that impact the ability of government at the state and local levels to provide very basic services necessary to the functioning of the economy and society.

The Kansas Legislature and Governor should revisit the income tax cuts and restore what Kansas once had in the way of services and a fair, stable, and balanced tax structure.  All options should be considered in dealing with this difficult budget crisis, but there should be no reductions to K-12 education, higher education, transportation, local units of government, or health care.

KEPC opposes measures such as a “taxpayer bill of rights” and other legislation that limits the ability to invest in services vital to a healthy economy and high quality of life.

KEPC supports local control by local elected officials.  As such, we oppose proposals that cap or artificially restrain local spending and revenue growth.

We oppose any proposal to eliminate economic development tools unless equally significant tools are enacted to replace them.  We support the efforts of Kansas economic development professionals to return the enterprise zone economic development benefits that were eliminated in 2011.  They were a useful business attraction tool, particularly in rural and non-metropolitan areas of the state.


KEPC supports the 2010 Transportation Program and opposes diversion of revenues that fund the plan as well as previously enacted revenue streams that are part of the program.  Investment in infrastructure has a strong positive impact on economic growth by improving efficiency of business operations, as well as through the jobs provided by construction.

Retreating on that investment is counter-productive.


KEPC supports Kansas investment in all levels of education, including higher education and training, which are necessary to maintaining and growing a quality workforce.

We believe Kansas must keep a high quality education system as an important component of our economic future and the new economy.

Health Care

We support programs that advance adequate and affordable health care including KanCare expansion of eligibility and coverage for the uninsured and economically disadvantaged.

KEPC generally opposes cuts to government payments to health care that fund essential services to a growing population of Medicare and Medicaid beneficiaries.

Other policy positions

  • KEPC opposes initiative and referendum, which, in other states, consistently promote anti-business ballot questions. This forces business to raise funds to oppose these measures, diverting revenue from business operations. Ballot questions also tend to require increased spending in some areas of the state budget while mandating decreased spending in others.  This has resulted in structural budgetary turbulence in states like California.
  • KEPC supports a business climate that seeks to retain and attract new businesses.
  • KEPC is part of the business coalition that supports responsible immigration legislation that does not burden the business community.
  • KEPC supports legislation to encourage further recognition and expansion of the renewable energy industries that have developed a foothold in Kansas and are a growing area of economic activity.
  • KEPC opposes any constitutional amendment that changes the selection of Supreme Court judges.
  • KEPC supports tax relief for C Corporations, such as flexibility in choosing a single factor to apply to income tax calculations.


What grows the economy?

The Kansas Economic Progress Council recognizes there are common components of economic growth which are broadly supported by respected empirical studies.  State governments have the ability to affect five of these elements.

The investment rate in plant and equipment, including efficient physical and communications infrastructure, has a strong positive impact on growth.  The higher an economy’s capital intensity (machines, buildings, roads, bridges, etc.) the more prosperous the economy.

Human capital and the efficiency of labor have also been shown to be significant to growth.  Measures of human capital include the literacy rate, school enrollment ratios, and labor demographics.

Linked to investment and human capital, there is substantial support for the contribution of continuing technological innovation and improvement in sustaining economic growth.  This suggests that support for research and development and education is important.

Public policy which supports economic freedom through open economies supports higher growth rates.

Reliable legal systems are a significant basis for economic growth.  These systems provide dependable enforcement of private contracts, protection of private property rights, effective law enforcement, and an absence of corruption.

With these elements in mind, the 2015 Legislative policies of the Kansas Economic Progress Council center on a competitive business climate through education, capital investments, economic development, quality jobs, and government and business stability.

Tax Study Released Today

A new study on the ramifications of lowering the state income tax was released today at a statehouse news conference. Bernie Koch, executive director of KEPC, and study author Dr. John Wong presented findings at the statehouse today. The study finds that, for every 1 job created, 1.63 are lost due to study released today finds that a lowering of the income tax would result in a loss of 1.63 jobs due to a reduction in overall state spending. The study was commissioned by the Kansas Economic Progress Council.

The press release is available here, and the ful text of the study is available here.

Dr. Wong’s slide deck is available here.

TABOR: Taxpayer Bill of Rights

TABOR is a state constitutional amendment promoted to regulate growth in state and local budgets under a highly restrictive formula.  The idea is used to shrink state and local budgets over time by cutting taxes when there is a surplus and reducing the budget when there are deficits.  TABOR requires voters to approve all increases in either taxes or state debt, while limiting growth in state revenue.  Some versions of the amendment also impose separate revenue limits on school districts and local governments.

The TABOR amendment was passed in 1992, making Colorado the only state in the nation to experience TABOR.  The effects of the amendment have taken nearly a decade to appear because spending limits typically rise at a rate only modestly lower than the cost of providing services.  But as the state of Colorado has learned, the difference grows and compounds significantly over the years.  Several cities and counties throughout Colorado have voted themselves out from under the limitations of TABOR.

  • In 1991-92, Colorado ranked 35th in state and local spending for K-12 as a share of personal income.  In 2000-01, the state fell to the 49th position.
  • In 1991-92, Colorado ranked 30th when comparing the average salary of teachers to annual earnings in the private sector.  In 2001-02, Colorado fell to 50th.
  • In 1991-92, Colorado ranked 35th in state spending for higher education as a share of personal income.  In 2003-04, they ranked 48th in the nation.
  • The appropriations received by the University of Colorado in FY 2004 were roughly the same in FY 1995.  However, the University has an estimated 4,927 additional students.
  • In 1992, Colorado ranked 23rd in adequacy of pre-natal care.  In 2002, the state ranked 48th. (1)

On November 1, 2005, Colorado reviewed the effects of TABOR and a majority of citizens voted to stop TABOR and retain state revenues.  This requires taxpayers to give up $3.7 billion in tax refunds over the next five years.  The business community was so alarmed that it raised a staggering $5.5M to support the campaign for the 5 year moratorium.

TABOR has hurt the Colorado economy and business leaders don’t like what they’ve witnessed.  According to Deloitte & Touche/Fantus Consulting, a good “business climate” depends as much or more on the quality of public services as it does on the state’s tax level.  The business environment in Colorado is quickly decaying as the state’s net worth, representing the publicly owned capital stock that provides the foundation for economic activity, is unparalleled. 

The rationale for a TABOR amendment in Kansas is that it will control state expenditures on education, social services, roads and bridges, prisons, insurance, etc.  However, the experience of our neighboring state shows that expenditures on these key services will be dramatically reduced or eliminated all together under TABOR.

Why is TABOR so dangerous for our State’s Constitution?  TABOR uses a restrictive formula based on population growth plus inflation rate to set spending annually.  The amendment also becomes permanent in the state constitution, limiting flexibility almost completely and making removal from the constitution extremely difficult.  Additionally, Federal mandates and unexpected costs cannot be met without squeezing existing programs.

Unintended consequences of TABOR

  1. Burden is shifted to the local level, increasing property and excise taxes.
  2. Increases in fees for licenses, new homes and developments, permits, tolls, etc.
  3. Inefficiencies (i.e. deferred maintenance on buildings and roads; outdated technologies etc.)
  4. Loss of federal money(1)

If Kansas would have adopted a TABOR amendment at the same time as Colorado, the landscape of our state would be radically different.  Kansas state expenditures would have been $890 million, or 19 percent lower in FY 2005 with TABOR in place.  However, the potentially large cuts that would have been required to accommodate the TABOR limits are astounding:  (1)

  1. 10,000 K-12 teachers would have been cut(1)
  2. The average pupil-teacher ratio would have increased from 15 to 23.(1)
  3. The Health Wave insurance program for low-income children would have been eliminated – State funding for Medicaid and the State Children’s Health Insurance Program would have been $135 million lower in FY 2005 with TABOR.(1)
  4. Increased university tuition by an average of $1,400 – Higher education would have faced a proportional share of state spending cuts in 2005 for combined cuts of $123 million among higher education institutions.  The system would have quickly evolved to something only the rich could use.(1)
  5. Incarcerating 1,300 fewer inmates – State funding for correctional facilities would have been $25 million less than it actually was in FY 2005.(1)
  6. No highway program would have been established in 1989 and 2000.
  7. Bonds issued to build research facilities at KU, KSU & WSU would have required a public vote.
  8. Public votes would have had to take place to build jails, convention centers, libraries and parks.
  9. The State’s judicially ordered remedy to prison overcrowding at El Dorado maximum security prison would have required a public vote.

The Kansas TABOR proposal is very similar to the amendment currently in place in Colorado.  It holds annual expenditure and revenue growth to inflation plus population.  The TABOR proposal also requires popular vote to override, just as the Colorado amendment does.

Expansion in numbers of governments has occurred in Colorado as a way of getting around TABOR.  The last thing Kansas needs is more governmental entities.

Rural Kansas would be the most devastated by TABOR amendments or statutes.  Most rural counties import significant state dollars to survive; in essence state funding is their lifeline.  With TABOR that lifeline is in jeopardy.

Additionally, when it comes to public voting, rural areas will be at the mercy of the more populated areas.

Starving state government will put significant pressure on priority areas such as social services and K-12 education.  Therefore areas important to business such as economic development programs, higher education and transportation will be the first to be cut.

A shift in the burden to provide basic services will occur from state to local level where the only recourse will be to raise property taxes.

A review of actual government spending in Kansas over the past several years does NOT reveal an alarming trend, in fact:

State and local taxes as a share of personal income are the same percentage today as they were in 1970 and the ratio has stayed about the same during that entire time period. Kansas was 29th in 2004 for total state taxes per capita, 29th in 2004 for state taxes as a % of personal income, 26th in 2002 for per capita state and local taxes and 27th in 2002 for state and local taxes as a share of personal income. (2)

According to the US Census Bureau, in the last few years Kansas’ per capita state spending has remained below the national average ranking 37th highest in 2003, 35th in 2002 and 2001 and 37th in 2004. (3)

(1) The Bell Policy Center, Center on Budget and Policy Priorities and the University of Colorado

(2) All tax numbers and rankings directly from US Census.  Rankings for taxes as a % of personal income use US Census tax data and personal income data from the Bureau of Economic Analysis

(3) US Census Bureau from Table states Ranked by Revenue and Expenditure Total amount and Per Capita Total Amount – various years, http://www.censuscgov/govs/www/state.html