PRESS RELEASE: Legislative voting record scorecard

Wichita, Kan. – The Kansas Economic Progress Council has released its House and Senate voting scorecards for the 2010 Kansas legislative session. The KEPC is highlights five votes in both the House and Senate that represent our major issue areas during the session.

KEPC Executive Director Bernie Koch said, “We were successful in achieving our goals in all five of these areas. That’s extremely gratifying for such a young organization. We believe all of these issues are important matters for the future economic prosperity of Kansas.

1. Long term transportation plan
KEPC supports pro-growth policies for communities and the state. Ample research shows that statewide transportation funding is vitally important to both existing and expanding business and is an important component to economic growth because of the jobs that such programs generate. Without a new transportation plan, Kansas spending for roads would have dropped to 1971 levels when adjusted for inflation.

2. One cent sales tax increase
KEPC supported a sales tax increase after our own study showed it would result in fewer Kansas job losses than a comparable reduction in state spending. The study was prepared for the Kansas Economic Progress Council by the Center for Urban Studies and Kansas Public Finance Center at Wichita State University. The study indicated 1,946 jobs could be maintained through a 1% sales tax increase and concluded that a sales tax spreads the negative effects broadly while budget cuts would have a more severe impact on businesses and jobs. Beginning in 3 years, a portion of the increase will support the transportation plan.

3. FY 2011 Budget
When government-provided services such as education, transportation, and public safety are not sound, it doesn’t take long for the economy to falter. Faced with the difficult choice of raising revenue or supporting more budget cuts, KEPC supported a budget funded with a revenue enhancement. The alternate proposals would have forced local school districts to increase property taxes. With education over 60 percent of the state general fund, other possible choices included cutting Medicaid, prisons, public safety, and social services.

4. Require supermajority to raise taxes
KEPC was originally founded in 2005 to oppose unreasonable spending and tax limitation legislation. The experiences of Colorado (where the Taxpayer Bill of Rights was suspended due to its impractical affect on government), and Missouri (where the Hancock Amendment has forced damaging state cuts to higher education and roads) have been warnings to Kansans. Amendments offered during Kansas House and Senate debate in 2011 would have required a supermajority to raise taxes. KEPC opposes these mechanisms.

5. Promoting Employment Across Kansas (PEAK)
KEPC believes the Kansas must continually evaluate its economic development tools so the state is able to quickly and effectively respond to growth opportunities and emerging economies. This year’s changes to PEAK (Promoting Employment Across Kansas) enhance one of our newer economic development tools. Employers that create new jobs are authorized to keep a portion of employee withholding taxes for a period of time. This valuable incentive is not implemented until an actual new job is created.

Notes on the scorecards:
• Votes in bold indicate the legislator voted against the KEPC position.
• If a legislator passed on a vote, it counts as a vote contrary to the KEPC position.
• If a legislator was absent, the vote is not counted toward the total percentage of their score.

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PRESS RELEASE: Sales tax best option study shows

An independent study finds that spending cuts will result in more job losses in Kansas than a one-cent state retail sales tax increase.

Kansas Economic Progress Council Executive Director Bernie Koch said the study was sought after January legislative testimony by Dr. Art Hall, a member of the unclassified professional staff at the KU School of Business. Hall’s testimony indicated a sales tax increase would cost over 19,000 jobs statewide. “We decided to seek a second opinion,” said Koch. “This study shows there are no easy choices, but the solution that causes the least economic damage is a revenue enhancement.”
The study was prepared for the Kansas Economic Progress Council by the Center for Urban Studies and Kansas Public Finance Center at Wichita State University. Dr. John D. Wong conducted the study. He is the Interim Director of both WSU centers and a member of the Kansas consensus revenue estimating committee.

The study results show that a $350 million reduction in state spending would result in the loss of approximately $420 million in output. This would also result in the loss of 5,177 jobs across the state.
A one-cent state retail sales tax increase would generate approximately $350 million in additional revenue, but would result in the loss of approximately $363 million in output. This would also result in the loss of 3,231 jobs across the state. Thus, the combined effect of maintaining $350 million in state spending with a one-cent sales tax increase is maintaining $57 million in total state output, $84 million in total value added, $102 million in labor income, and 1,946 jobs.

The study gives three reasons why a sales tax increase has a lesser negative impact.
“First, a high percentage of government expenditures initially stay within the state’s economy, going either to employees (state residents) in the form of salaries or to local businesses for the purchase of goods and services.”

“Second, the revenue enhancement scenario spreads the negative effects throughout the state, both geographically and across all 2.8 million residents. The effect on any individual and on any business is minor. In contrast, the spending reduction scenario severely affects a small number of state residents and businesses-state employees and those private-sector businesses that serve state employees and state government directly. The likelihood of a business failing under this scenario is much greater than in the tax increase scenario.”

“Third, a portion of the sales tax increase will be exported to tourists and other visitors to the state. The full effect of the tax increase is not felt within Kansas.
“We are pleased that Dr. John Wong agreed to do the study,” Koch said, “particularly because of his impressive credentials and outstanding reputation as a researcher and economist.” The study will be sent to every Kansas legislator.

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