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Stagnation continues in the Kansas economy with tax & spend mentality

Stagnation continues in the Kansas economy with tax & spend mentality

Contrary to what you may hear from the state’s major newspapers and TV stations, the Kansas economy isn’t doing very well.  It’s not a secret – the public data clearly shows Kansas trailing the nation in jobs and other measures of economic growth – so ignoring the negative economic news is a conscious decision.

We won’t speculate on media motivations for consciously ignoring evidence of weakness in the Kansas economy, but the data is disturbing and weighing on taxpayers’ minds.  A statewide public opinion poll conducted by SurveyUSA on behalf of Kansas Policy Institute shows economic issues are the most important in the upcoming November election.

 

The top three issues that will determine how likely voters choose how to vote for governor and the Legislature are rising prices/inflation (28%), economy and jobs (17%), and taxes/spending (16%).

 

33,000 fewer jobs than in January 2020

As The Sentinel reported two weeks ago, Kansas lost 3,400 jobs in August, while the nation added 315,000.

Data from the Bureau of Labor Statistics shows there are still about 33,000 fewer people working than in January 2020, giving Kansas the seventh-worst job recovery record on a percentage basis.  Only Alaska, Hawaii, Louisiana, New York, North Dakota, and Vermont are worse.

And at the pace since January 2021, it will be several months into 2023 before employment returns to pre-pandemic levels.

 

Weak GDP growth in the Kansas economy

Most states’ real (inflation-adjusted) Gross Domestic Product growth was negative in the first quarter of 2022 because inflation was so high.  Still, Kansas did worse than most, according to the Bureau of Economic Analysis.  Kansas recorded a decline of 0.6% and earned a ranking of #39 among the states; only oil-dependent Oklahoma had a worse performance in the region.

Compared to the first quarter of 2019, real GDP in Kansas is 2.7% higher and well below the national average of 4.8%.  Second quarter data is not published at this time.

 

Kansans are losing money because of tax-and-spend inflation

BEA data also shows that Kansans are losing money due to tax-and-spend inflation.  The nonfarm earnings component of personal income – wage and salary disbursements, employer contributions for pension, insurance, and social security, and proprietors’ income – grew 1.3% in the first quarter of 2022.  But quarter-to-quarter inflation was 2.1%.  And only five states had lower income growth.

Compared to the first quarter of 2019, nonfarm earnings in Kansas are 13.9% higher and well below the national average of 17.9%.

 

The tax-and-spend mentality in Kansas hurts families and employers

Like runaway spending at the federal level, the tax-and-spend mentality in Kansas is also creating economic harm.  Spending exploded in Kansas over the last four years, jumping 23% from $6.6 billion to $8.2 billion.

The Legislature imposed the largest tax increase in state history in 2017, overriding Gov. Brownback’s veto.  Legislators passed modest tax relief bills in 2019 and 2020, only to see Gov. Laura Kelly veto both efforts.  The Legislature finally was able to override her 2021 veto, but most Kansans still have a high tax burden, especially relative to other states.

 

Conclusion

Einstein’s definition of insanity – doing the same thing over and over but expecting a different result – may be a cliché, but it bears repeating.  The Kansas economy will continue lagging behind as long as politicians on both sides of the aisle keep pushing business subsidies and more government spending as ‘solutions.’  No government has ever taxed or spent its citizens to prosperity, and it won’t happen in Kansas.

Kansans need lower state and local taxes, which can be paid for by reducing the cost of government.  Streamlining the regulatory burden would also create economic growth for businesses and individuals.  And stop giving handouts to a few businesses in the name of economic development.  The Tax Foundation says subsidies are one of the reasons that Kansas has the highest effective tax rates on mature businesses.