Kansas’ credit rating on negative watch at S&P
Source: Kansas City Star
Brownback last week presented three options for the Legislature to consider to address the shortfall. One option would sell off future payments from a tobacco settlement lawsuit to bondholders for $158 million. The second would delay a $99 million payment to the state employee pension system until fiscal year 2018, with a requirement that it be repaid with 8 percent interest.
Those two options “provide a bridge through fiscal years 2016 and 2017, until a new two-year budget is developed addressing structural reform and any implications from the upcoming Supreme Court decision on education funding,” said Eileen Hawley, Brownback’s spokeswoman. “The third option reduces state spending and would create a more structurally balanced budget, as indicated by S&P.”
The third option would reduce spending for most state agencies by 3 percent to 5 percent, including for K-12 public schools and state universities. The cut to K-12 spending would be $57 million.
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Democrats and some Republicans have called for rolling back a Brownback-led income tax exemption for 330,000 business owners, part of the Republican governor’s plan to cut state income taxes. Brownback has maintained that the state’s revenue shortfalls are due to a sluggish state economy and not due to tax policy.
Read more: http://www.kansascity.com/news/politics-government/article73789707.html
So, Kansas Republican Governor Brownback is now just trying to kick the can down the road, rather than repeal his signature tax cuts. Instead of addressing the structural deficit that he created, Brownback is considering closing the budget gap with one-time budget gimmicks. Of course, as noted by Mother Jones, the two leading Republican presidential candidates, Trump and Cruz, are pushing tax plans that might even make Brownback blush:
http://www.motherjones.com/politics/2016/03/trump-cruz-campaign-tax-policy
Here's the breakdown: The CBPP first took the Tax Policy Center's estimates of how far tax revenue would fall if Trump's or Cruz's plan were implemented. For Trump's proposal, the figure is $9.5 trillion over 10 years; for Cruz's, $8.7 trillion. This would place revenues as a percentage of the national GDP in the range of what they were in 1950—before Medicare existed and when Social Security claimed only 0.3 percent of gross domestic product. (Today, Social Security and Medicare account for 8.1 percent of GDP, and this amount is on the rise, thanks to those aging baby boomers.)
Numbers! I know—by now you're wondering, Hey, has Donald Trump tweeted anything in the past 20 minutes? But let's bravely trek on. The CBPP examined what would happen with this loss in tax revenues. After all, if you reduce revenues—and if you're not willing to turn the federal deficit into an exploding supernova—you have to cut spending. So how much will have to be cut? According to the CBPP, if Trump or Cruz is going to reduce taxes and balance the budget by 2026—and they both vow to bring the US government into the black—all government programs would have to be cut by 40 percent. That includes Social Security, Medicare, and the military. If Trump and Cruz don't want to eviscerate Social Security, Medicare, and the military, there is another option: eliminating the rest of the US government. That's right, simply get rid of it all: the Environmental Protection Agency, the Centers for Disease Control and Prevention, infrastructure, law enforcement, cancer research, food stamps, Medicaid, immigration enforcement, NASA, you name it.
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