Category Archives: Economy

Fiscal trends only count if they are positive?

cashGov. Sam Brownback doesn’t like it that the media are focusing on how the state’s cash balance is rapidly disappearing and that it is borrowing twice as much money this coming fiscal year as it did this year. But Brownback is the one who has pointed to these measures as evidence of the success of his policies. Brownback has repeatedly bragged in recent years about the amount of the state’s cash balances. And last year he boasted about how the state needed to borrow only $300 million to help meet cash-flow demands. If those were signs of success, why aren’t the opposite trends cause for concern?

Unrealistic to think that state tax policy drives economy?

taxrevenueGov. Sam Brownback and GOP lawmakers blamed President Obama for why Kansas tax collections in April were $93 million less than projected. “There are … natural consequences for being in an ocean, in a sea, that belongs to Obama,” said Rep. Pete DeGraaf, R-Mulvane. Though it is silly to blame the revenue drop on Obama, it certainly is true that the Kansas economy is linked to the national and global economies. That being the case, was it unrealistic to think that Kansas’ income-tax cuts, which were relatively small compared with the larger economy, would act like “a shot of adrenaline into the heart of the Kansas economy,” as Brownback promised? So far, Kansas’ economy is lagging the nation and neighboring states while personal income-tax collections are $508 million less than at this point last fiscal year.

If tax revenues are off, it’s Obama’s fault?

Inaugural Swearing InIt has been almost comical to hear the shifting responses by Brownback administration officials to changes in state tax revenue collections. When the March tax collections came in higher than projected, Kansas Revenue Secretary Nick Jordan boasted about how “we’re seeing the Kansas economic engine running.” But when the April collections came in $93 million less than projections (which were made only two weeks ago), Jordan and Gov. Sam Brownback blamed President Obama and the national economy. Meanwhile, Moody’s Investors Service has downgraded Kansas’ state bonds, citing the state’s sluggish economy, budget problems and revenue reductions resulting from tax cuts. Is that Obama’s fault, too?

Kansas near bottom in new business development

smallbusinessThe 2013 Kauffman Index of Entrepreneurial Activity ranks Kansas 45th among the states and Washington, D.C., in new business development. Kansans created new businesses each month at a rate of 180 per 100,000 adults, according to the report. Montana had the highest entrepreneurial activity rate, with 610 new businesses per 100,000 adults. The U.S. average was 280. All the states immediately surrounding Kansas had higher entrepreneurial rates.

Encouraging deficit news, but debts still mounting

BudgetDeficitThe federal budget deficit is projected to fall to $492 billion this fiscal year, or 2.8 percent of the gross domestic product, according to a new report from the Congressional Budget Office. That’s lower than the 3.1 percent average of the past 40 years, and almost 32 percent lower than last fiscal year. “This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009,” the CBO report said. But lawmakers and President Obama shouldn’t stop being concerned. Though the deficit is expected to drop again next year, it is projected to rise sharply after that. And even when the deficit is declining, it is still adding to the national debt, which now totals more than $17.5 trillion.

Brownback wanted economy measured in ‘timely manner’

taxrevenueIn the commentary on today’s Opinion page, Stan Ahlerich, executive director of the Governor’s Council of Economic Advisors, argues that it is irresponsible to look only at “a narrow, short-term set of facts” when evaluating the state’s economy. But these facts are the very benchmarks that Gov. Sam Brownback and the council established to measure the state’s economy. And Brownback himself said two years ago that they should be used “to monitor in a timely manner if our policies and initiatives are having the desired economic effect.” Brownback also said that his tax cuts would act like “a shot of adrenaline to the heart” of the Kansas economy. That sounds like Kansas was supposed to see quick improvements – not see lower growth rates than the regional average on all but one of the measurements. Even when the past five years are compared, Kansas lags the regional average in nearly all the council’s benchmarks.

Kansas’ economy, employment lagging region

kansasgreetingsAnother report shows the Kansas economy is lagging, and this one can’t be dismissed by Gov. Sam Brownback’s supporters. That’s because it is from the governor’s own Council of Economic Advisors and is based on benchmarks established specifically to measure economic trends. The March 2014 report shows that in the past year Kansas grew less than regional states in population, gross state product, personal income, employment, private-industry wage level, private-business establishment and several other measurements. For example, Kansas’ private-sector employment growth rate was 0.9 percent compared with 1.5 percent for the six-state region (and 2.1 percent for the nation). Also, private-industry wage levels went down slightly in Kansas but up slightly in the region and nation. The only measure in which Kansas did better than the regional average last year was in the growth of building permits. In establishing the benchmarks two years ago, Brownback said they would enable the state “to monitor in a timely manner if our policies and initiatives are having the desired economic effect.” So far, the answer is “no.”

Comparatively low unemployment rate normal for Kansas

jobhuntKansas’ unemployment rate in February was 4.9 percent, a 0.1 point increase from January. Kansas was one of only 10 states in which the unemployment rate increased last month. It decreased in 29 states and nationally. Kansas now is tied for having the 12th-lowest unemployment rate, down from the 10th lowest the previous month. A commercial praising Gov. Sam Brownback’s accomplishments highlights the 10th-place ranking. However, Kansas has long had a low unemployment rate compared with other states. In January 2011, the month Brownback took office, Kansas had the 12th-lowest unemployment rate. The year before, in January 2010, it was the fourth lowest.

New business filings don’t reflect full picture

smallbusinessBecause the Kansas economy is growing at a lower rate than the economies of neighboring states and the nation, Gov. Sam Brownback has pointed to new business filings as evidence that his tax cuts are starting to work. But noting that the state had more than 15,000 new business filings in 2013 doesn’t reflect the full picture. That’s because more than 16,000 other businesses were dissolved by their owners or forfeited for failure to file an annual report, according to the Center on Budget and Policy Priorities in Washington, D.C. The net increase in registered businesses, after adding back 4,500 businesses that owners reinstated that year, was only about 3,600. “When you do the math, the net new growth in Kansas in 2013 is actually smaller than before the tax cuts of 2012 took effect,” said Annie McKay, executive director of the Kansas Center for Economic Growth.

Job growth slow, mostly in lower-paying jobs

jobhuntNot only is Kansas’ job growth less than the national average and less than that of surrounding states (which didn’t cut their income taxes), much of the job growth occurring in Kansas is in lower-paying jobs. “Six out of the 10 fastest-growing jobs don’t pay enough to keep a family of three out of poverty,” according to the Kansas Center for Economic Growth.

Still much to do on fiscal reform

nationaldebtThe federal deficit for 2014 will be $514 billion, or 3 percent of the size of the U.S. economy, according to new estimates by the Congressional Budget Office. As a share of gross domestic product, that’s the smallest deficit since 2007. Though the deficit has dropped dramatically, “our nation’s largest fiscal problems remain – and solving them is essential to future economic growth and prosperity,” the nonpartisan Concord Coalition said in a statement. According to the fiscal watchdog group, “these problems include mounting federal debt, rising interest and health care costs, an aging population and a tax code that lavishes hundreds of billions of dollars a year in subsidies on favored individuals and industries.”

Job growth slowed after state tax cuts

helpwantedThe good news for Kansas and Gov. Sam Brownback is that the state’s unemployment rate dropped to 4.9 percent last month, the lowest level in five years. The bad new for Kansas and Brownback’s re-election campaign is that the rate of job growth last year was only 0.7 percent, less than in all of the surrounding states. So while Brownback’s tax cuts were supposed to spur job growth, the rate actually dropped last year and was less than the rates in states that didn’t cut their taxes. Missouri, for example, had a job-growth rate last year of 1.3 percent, nearly twice that of Kansas.

Kansans losing about $1.5 million a week in benefits

joblessThe expiration of emergency unemployment insurance benefits on Dec. 28 already has taken about $1.5 million out of the pockets of 4,400 Kansans, according to Democrats on the U.S. House Ways and Means Committee. Nationwide, about 1.3 million people lost about $400 million in weekly benefits when Congress didn’t renew the Federal Unemployment Compensation program.

Brownback tries to downplay pope’s criticisms

popefrancisGov. Sam Brownback tried to downplay recent comments by Pope Francis (in photo) about economic policies, suggesting there wasn’t any disagreement between them. What the pope was really trying to say, Brownback told the Topeka Capital-Journal, was that “we shouldn’t have unfettered capitalism.” Brownback said he didn’t think the pope was saying “you should tax and take all the money from the private sector and it should be run by the public sector.” Of course that wasn’t what the pope was saying. He wasn’t discussing economic extremes. What the pope said was that trickle-down economics hasn’t helped the poor and reflects “a crude and naive trust in the goodness of those wielding economic power.”

Will cash reserves run out before economy takes off?

emptypocket“A lot of economists have said that five years is really the time that it takes to have a full and accurate and complete understanding of the impact,” Jon Hummell, Gov. Sam Brownback’s acting budget director, said about the state’s income tax cuts. But does the state have enough cash reserves to make it until then? Former state budget director Duane Goossen noted that the state expects to take in $5.856 billion in revenue this fiscal year but has an approved general fund budget of $5.964 billion, or a $108 million deficit. Next fiscal year, the Kansas Legislative Research Department estimates that the deficit spending will total $204 million. If spending and revenue rates continue, the state will run out of cash reserves within four years. Better-than-projected revenue growth could delay or avoid these shortfalls. Then again, the estimates don’t count any additional education spending that might be necessary due to the school-funding lawsuit.

Large majority supports raising minimum wage

A new Gallup survey found that 76 percent of Americans would support a law to increase the federal minimum wage to $9 a hour (currently $7.25). Even 58 percent of Republicans backed the increase. A large majority (69 percent) also support the $9 rate along with future automatic increases tied to inflation, though only 43 percent of Republicans supported automatic increases. The minimum wage’s real value has declined by 33 percent since 1968, Gallup reported.

End economic-development ‘border war’

It’s good that Missouri and Kansas officials are getting serious about ending the economic-development “border war” in the Kansas City metropolitan area. Missouri Gov. Jay Nixon (in photo) called this week for a permanent moratorium on using tax incentives to lure Kansas City companies across the state line, noting that the incentives costs taxpayers but results in no net gain to the local economy. Kansas Secretary of Commerce Pat George has been spearheading similar effort in Kansas to curb the incentives. Getting state lawmakers from outside the Kansas City area to agree to a cease fire may be the biggest challenge.

Support McConnell by attending public hearing

The public needs to show its support for McConnell Air Force Base and the expansion of its refueling tanker fleet by attending a public hearing from 5 to 8 p.m. Tuesday at the Wichita State University Hughes Metropolitan Complex, 29th and Oliver. The hearing is hosted by the U.S. Air Force and is part of its final decision process on whether to make McConnell the first main operating base for new tankers. Those who attend the hearing can make a verbal statement, submit written testimony, or just sign-in to show their support for McConnell, which has an estimated annual economic benefit to the Wichita area of $619 million. It is important that as many people as possible attend the hearing.

Fiercest Obama opponents come from poor districts

The 45 House Republicans who have most consistently pushed their caucus to brinkmanship represent districts (mostly in the Deep South) that are significantly worse off economically than the nation at large, the Washington Post reported. “The median income in those districts last year was 7 percent lower than the national median, according to the Census Bureau,” the Post said. “The unemployment rate averaged 10 percent. That was almost 2 percentage points higher than the national rate, and 2 percentage points higher than the overall rate in the states that contain each district.”

Delegation not worried about debt-ceiling deadline

As Congress works to reach a deal to raise the debt ceiling, at least two members of the Kansas delegation aren’t worry about missing the Tuesday deadline. Rep. Mike Pompeo, R-Wichita, told The Eagle editorial board that there is “nothing magic about Oct. 17.” He argues that the Treasury will still have enough money to pay its securities and there is no risk of default. Rep. Tim Huelskamp, R-Fowler, has argued that there wouldn’t be problems until Oct. 31 or Nov. 15. But Wall Street CEOs respond that the market will react the same – badly – whether the government defaults on bond payments or doesn’t pay other bills. Daniel Larison of the American Conservative wrote that debt-ceiling deniers seem to have “no sense of prudence or consideration of unintended consequences,” and he questioned their competence. “If this is how they approach the most basic responsibilities of governing,” he wrote, “why are voters going to trust them to implement their larger policy agenda?”

The longer the shutdown, the worse the problems

Many Kansans have been somewhat cavalier about the partial federal government shutdown, because it hasn’t directly affected them yet. But the longer the shutdown drags on, the bigger the problems and the more lives it will affect. As The Eagle reported Friday, the shutdown already has brought aviation sales to a halt, because aircraft registrations no longer can be obtained through the Federal Aviation Administration. The shutdown also means that some aircraft can’t get inspected. “It’s having a huge economic effect on businesses small and large,” said Pete Bunce, president and CEO of the General Aircraft Manufacturers Association. Enough with the grandstanding. End the shutdown and let people go back to work.

Could be years to determine impact of state tax cuts

So far, the state’s income tax cuts haven’t acted like a shot of adrenaline into the heart of the Kansas economy, as Gov. Sam Brownback said they would. Nor is that likely in the near future, according to top economists at the Kansas Department of Labor. They said this week that it was too early to tell if the tax changes are having an effect on job growth, and that it might take up to five years to determine the impact on employment, the Lawrence Journal-World reported.

Kansas unemployment rate rises again

The seasonally adjusted unemployment rate in Kansas was 5.9 percent in July. That’s the third straight month that the unemployment rate has increased. The Kansas Department of Labor attributed the increase to more people entering the job market and noted that the number of private-sector jobs continued to grow. Others question the impact of Gov. Sam Brownback’s tax cuts. “Though advocates of substantial tax cuts promised a shot of adrenaline to the Kansas economy, so far it’s more like a shot of Valium,” said Annie McKay of the Kansas Center for Economic Growth and Amy Blouin of the Missouri Budget Project, writing in the St. Louis Post-Dispatch last week.

Fast food might be slow today in some cities

Some fast-food workers in seven cities, including Kansas City, are walking off the job today to protest low wages. The workers want to get paid $15 per hour, but industry officials say that the restaurants don’t have a high enough profit margin to afford that. Meanwhile, McDonald’s is getting grief for providing budgeting advice to its workers that included them working two jobs to get by (and assumed they needed to spend only $20 a month on health insurance).

State rankings improve but economy lags

The Brownback administration recently touted slight improvements in two state business rankings, but another report shows Kansas trailing most other states in economic growth. Kansas moved from eighth to sixth in the Pollina Corporate Real Estate annual rankings of states, and it moved from 15th to 14th in a CNBC ranking of state business environments. But a report by the Tax Policy Center found Kansas lagging most states in economic growth from February to May and predicted it will trail in the next six months, the Lawrence Journal-World reported. “Most states improved over the past quarter; only Alaska, Kansas, Nevada, Wisconsin and Wyoming experienced declines,” according to the report, which looked at nonfarm employment, average manufacturing hours worked, the state’s unemployment rate and real wages.