Kansas’s credit rating was reduced by Standard & Poor’s, which cited the effects of income-tax cuts endorsed by Republican Governor Sam Brownback that weren’t matched by less spending.
The rating fell to AA, third-highest, from AA+ and the state’s appropriation-secured debt was dropped to AA- from AA, S&P said today. The outlook on both ratings is negative, which “reflects our belief that there will be additional budget pressure as income tax cuts scheduled in future years go into effect, or if midyear revenue shortfalls resume,” credit analyst David Hitchcock said.
Moody’s Investors Service in April cut the state’s debt rating for similar reasons.
Tax reductions approved by the legislature in 2012 resulted in the state’s taking in about $340 million less than forecast during the year ended June 30. Brownback and his supporters have said lowering taxes would spur the economy.
“Breaking our addiction to high taxes and soaring debt is difficult, but necessary if we are to continue growing,” Brownback said in an e-mail today from his office in Topeka.
“We need jobs and we have proven the way to that is through lower taxes,” said the 57-year-old first-term governor, who is a former U.S. senator.
The reductions have been controversial, in a bipartisan way. More than 100 Republicans, including a former chairman of the state’s party, last month endorsed the governor’s Democratic opponent, Representative Paul Davis. Duane Goossen, a former Kansas budget director, predicted the squeeze will tighten in the next fiscal year.
Tax collections inched upward last month, beating estimates by $1.6 million, according to a July 31 press release from the Kansas Department of Revenue.
“We are cautiously optimistic,” said Revenue Secretary Nick Jordan in the release.
Brownback was renominated yesterday, winning the state’s Republican primary with 63 percent of the vote. He told MSNBC in an interview last month that if re-elected in November he will continue to push for more tax cuts.