Kansans hungry for good economic news should focus on — Kansas.
The Kansas Department of Labor has just released a 50-page economic report that shows the Sunflower state, like the rest of the farm belt, has more jobs and better job prospects than the country as a whole. Our unemployment rate is 6.7 percent. The national rate is over 9 percent. Surveys of the various economic sectors in the state show that the number of jobs in the overwhelming majority of them will increase.
Tax collections increased $27 million above estimates in September. It was the sixth month in a row that revenues beat estimates. This far into the year, the state is $66 million ahead of the estimate made in the spring by a team of economists called the consensus estimating group.
The Kansas economy, is, in a word, growing.
High agricultural prices and a continued demand for grains and meat abroad are given credit for the relative strength of the Kansas economy. Those factors also boost incomes and create jobs in the rest of the Great Plains and Midwest. Texas, Oklahoma, Wyoming and the Dakotas also benefit from high energy prices, as does Kansas to a lesser extent.
Prospects remain modest. The construction sector isn’t expected to do much hiring near term. Banks are not rushing in to offer cheap money to speculators. Families are still paying off debts incurred in the earlier boom years. Those who do buy houses snap up the bargains created by foreclosures and lost jobs. Kansas, however, has a stronger housing sector than do the states that saw the biggest housing boom and then were hit by the biggest collapse in housing prices since the Great Depression, flooding the market with foreclosure bargains.
THERE ARE ALSO some clouds on the horizon. House Speaker Mike O’Neal, a conservative’s conservative, warns that the states will be hit by what he calls a “D.C. recession,” caused by even greater cutbacks in federal government spending that will impact almost every state government sector.
Kansans can also worry about a “Topeka recession.”
Promised cuts in state taxes will impact the state’s cities and counties just as cuts in federal spending will put pressure on state budgets.
Gov. Sam Brownback is persuaded that reducing the state’s income and corporation taxes will stimulate the economy, create more jobs and thus more than compensate through economic growth for the loss in state revenue. Because the House is at least as conservative as the governor and the Senate is also firmly in the hands of Republicans, tax reductions seem likely.
Unless the economy grows fast enough for lower tax rates to raise more money — an unlikely boon — the Legislature will be forced to cut spending on education, highways, prisons and law enforcement, Medicaid, the poor and the disabled.
The notion that diverting money from government to the private sector will create economic growth has not been proved or disproved. It remains a conservative theory that is preached with near-religious fervor but has yet to become a governing philosophy. Will cutting taxes only make the rich richer, or will the benefits lift every boat in the harbor?
Kansas is on track to become the nation’s laboratory rat in that economic experiment.
— Emerson Lynn, jr.
