Editorial: Cash-strapped Iowa should learn from Kansas

Iowa Republicans take note: The Kansas experiment is over.

For that matter, so is the Louisiana experiment.

Lawmakers in both states, having finally come to the realization that drastic tax cuts result in drastic cuts in critical public services — gee, who woulda thunk it? — have thrown the car into reverse and are backing up. They’re imposing new taxes to not only backfill the depleted state coffers, but also to better position the states moving forward.

In Kansas last week, legislators voted to roll back a series of major tax cuts that served as a model for Iowa and other states. They never generated economic growth that was promised by the Republican governor, Sam Brownback, and GOP lawmakers in 2012.

Some of the most conservative Republicans in the Kansas Legislature, who had long defended the tax cuts amid complaints about welfare cuts, the privatization of Medicaid, a $200 million cut in the schools budget, and the elimination of 2,000 state jobs, aligned themselves with Democrats in overriding Brownback's veto of a billion-dollar tax increase.

Sadly, however, it wasn’t a sudden epiphany, or the steady drumbeat of constituent complaints, that caused the conservatives to see the error of their ways. It was a $900 million hole in the budget and a Kansas Supreme Court decision that effectively ordered lawmakers to adequately fund the public schools.

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In Louisiana, Republican Bobby Jindal inherited a $1 billion surplus when he took office as governor in 2008. Eight years and a series of massive tax cuts later, Louisiana had a $1.6 billion deficit. And no wonder: Even as Jindal slashed services for the poor, he bestowed tax cuts on the wealthy that drained the state treasury of almost $800 million per year. The state now has a Democrat for a governor, has increased its sales tax and is now considering a complete overhaul of its tax system.

Gov. Kim Reynolds of Iowa should look closely at what has happened in Kansas and Louisiana.

Right now, Iowa faces a budget shortfall of nearly $100 million for the fiscal year that ends in just three weeks. That’s because revenue projections have, once again, proven to be far too optimistic. The Legislature already approved $118 million in budget cuts this year and drew an additional $131 million from the state's cash reserves.

Reynolds’ options are limited: She can impose across-the-board budget cuts, call a special session of the Legislature to make targeted cuts, or she can dip further into the state's cash reserves.

To her credit, Reynolds recognizes the need for tax reform. Iowa does need to simplify its corporate taxes so that the artificially high corporate-tax rate (which few companies actually pay) is reduced, while the tax breaks that result in some major corporations paying nothing at all are eliminated.

But Reynolds continues to take the position that the taxes currently paid to the state are too high. The theory that a state can slash its way into prosperity — and make itself attractive to businesses by dramatically cutting spending on schools, law enforcement, human services and natural resources — has been proven wrong on numerous occasions.

Voters are catching on, too. Only one other governor in America, New Jersey’s Chris Christie, has a worse job-approval rating than Sam Brownback.

Back in 2013, after signing the largest tax cut in Kansas history, Brownback told the Wall Street Journal, “My focus is to create a red-state model that allows the Republican ticket to say, ‘See, we’ve got a different way, and it works.’ ”

Brownback got half his wish. He succeeded in creating a red-state model for the nation, but it stands now as an example of how not to construct a state budget.

Let’s hope Kim Reynolds is paying attention.