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KS: Trip over fiscal cliff more of a stumble

By   /   January 2, 2013  /   No Comments

By Gene Meyer | Kansas Reporter

FISCAL CLIP: Washington tax fight is mixed blessing for state tax hawks.

FAIRWAY – Kansas’ trip over the fiscal cliff isn’t like the climactic scene from the movie Thelma and Louise, the way economists describe it.  It’s more like Wile E. Coyote’s delayed drop in those classic Warner Brothers cartoons.

“There’s good news and bad news,” said Jeremy Hill, executive director of Wichita State University’s Center for Economic Development and Business Research.

The good news: Washington negotiators averted what might have been a $2,300 tax increase for many families. That leaves Kansas families free to spend their estimated $700 or more in new Kansas state tax cut savings on something other than federal taxes.

“And we know they will spend the extra money,” Hill said. “That will produce more of the stimulus effect that Gov. (Sam) Brownback wanted.”

The bad news: Congress and President Barack Obama only kicked the tax-cutting-and-spending-reduction can down the road, creating what may be equally tough impasses when  federal-debt ceiling deadlines approach in two months.

That prolongs uncertainty felt by Kansas employers and the estimated 23,000 unemployed people who stopped looking for work in 2012, said economist Ernie Goss of  Creighton University in Lincoln, Neb.

Goss leads a monthly survey of business conditions in Kansas and eight other Midwestern states. The latest survey, released Monday, suggests that some of the 5,000 new jobs Kansas workers found last year may be in trouble by mid 2013.

“New national numbers came out today, and they aren’t all that good either,” Goss said Wednesday.

Small businesses that Brownback and other tax-cut supporters say will pull Kansas out of its economic doldrums haven’t fared well either, according to a new survey of customers by Intuit Inc., the Mountain View, Calif., business and tax software publisher.

The number of Kansas businesses with 20 or fewer employees dropped .04 percent during 2012, the software giant found after a December survey. That is the third largest drop reported in the nation, after Connecticut, where numbers dropped .4 percent, and Wisconsin, down .2 percent.  How many businesses those numbers represent wasn’t immediately clear, said Tammy Lan, Intuit’s senior public affairs specialist in Mountain View.

Brownback’s administration declined Wednesday to speculate how hiring uncertainties might affect Kansas’ general fund budget, now projected to be $295 million in the red after the state tax cuts kicked in Tuesday.

“We’re still working on the final budget details now and will not release details until the governor has submitted his proposal to the Legislature,” said Sherriene Jones-Sontag, the administration’s communications director.

Brownback is expected to do that soon after his Jan. 15 State of the State address to legislators.

Contact Gene Meyer at gene.meyer@kansaswatchdog.org

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