Friday, October 31, 2014

SHERRER and MOORE: Kansas must change direction on creating jobs

By GARY SHERRER and JOHN MOORE, Former Kansas Lieutenant Governors | 3/11/2014

Three years ago, Kansas Gov. Sam Brownback announced his plan to stimulate the state’s economy and create jobs. His plan was to implement extreme state income tax cuts that benefit certain businesses and high income individuals.

Recalling the promises and promotion at the time, the governor said “these tax cuts will stimulate the economy like a shot of adrenaline to the heart.” He promised they would create 33,000 new jobs and that the taxes paid by the new job holders will make up for the revenues lost by these tax cuts.

It is now clear this plan has failed. The Center for Budget Priorities recently released a study showing that Kansas ranked 46th in the country for private job sector creation. The state’s job growth rate is significantly below those of all our surrounding states. Job growth in Missouri is almost twice that of the growth rate in Kansas. The Kansas workforce actually shrunk from 2009 to 2013.

There are several reasons this plan has failed and will never create large numbers of good jobs.

First consider companies that Kansas successfully recruited in the past, which is a process we have been personally involved with as former Kansas Secretaries of Commerce. For major companies like Amazon.com and INVISTA — not to mention Cessna’s $40 million facility in Independence, Kan. — state income taxes never factored into the decision making process. Nor were they considered when one of Kansas’ great boat building companies brought work from another state back to Kansas. State income tax levels are rarely among the critical considerations for making the decision to locate or grow a business in a state.

In fact, in the 12 years we recruited businesses to come to Kansas, the subject of state income tax was never raised.

Second, the Brownback tax plan is resulting in the loss of billions of dollars in revenues. This, coupled with other actions by Brownback, is preventing investments in infrastructure that are always essential to economic growth. Most important among these infrastructure investments are public education and highways.

Brownback implemented the largest cut in funding for public education in the history of the state. Workforce expansion simply cannot happen without a strong educational system staring from K-12 through technical training and higher education. Education is how qualified or trainable individuals are available to fill positions for employers growing, relocating or starting their businesses. The simplest rule of business site selection is: there must be a qualified work force available. If not, a site cannot be considered.

Sadly, there is no provision to recover these funds even though the jobs they were intended to create have not materialized. The reality today is that billions of dollars have been lost and there is no plan to recover them.

The governor’s extreme tax cuts have also caused over $1 billion to be taken from the highway fund. Government officials have realized for decades the importance of an outstanding transportation system for economic growth and job creation. Yet, the Brownback administration has taken a billion dollars from the highway fund to make up for lost state income due to their extreme tax cuts.

Two other unintended consequences of this extreme plan need referencing. Revenue losses have caused irresponsible deficit spending and a budget shortfall currently forecasted at hundreds of millions of dollars. Also, the implementation of these tax cuts has been so hasty that the historically sound and balanced revenue streams have been shocked. New adverse ramifications are becoming obvious every day across the state, such as higher sales and property taxes.

If you are elected governor, it is to be expected that your policies will be enacted. That was the case when the governor implemented his extreme tax cut plan. It has not worked and it will not work.

Economic growth and job creation are not partisan issues. The people of Kansas expect their elected leaders to work together to ensure good jobs are created and Kansans are qualified for them. We urge Gov. Brownback and the Legislature to move away from an experimental and extreme tax policy. They must return to the proven economic growth principles of a balanced tax policy, a strong educational system that qualifies individuals for good jobs and a strong infrastructure. Kansans deserve no less.

Gary Sherrer is a former Republican Kansas lieutenant governor, serving from 1996 to 2003, under Gov. Bill Graves. John Moore is a former Democratic Kansas lieutenant governor, serving from 2003 to 2007, under Gov. Kathleen Sebelius.

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