S&P knocks Kansas’ credit rating for failure to reel in spending
TRIM IT: S&P analyst David Hitchcock says Kansas failed to balance tax cuts with necessary spending reductions.
By Travis Perry │ Kansas Watchdog
OSAWATOMIE, Kan. — Kansas caught another whack to its wallet Wednesday after national fiscal hawk Standard & Poor’s downgraded the state’s credit rating from AA+ to AA.
As the political spin began to ramp up within minutes of the announcement, S&P credit analyst David Hitchcock made one thing abundantly clear: Kansas has a spending problem.
“The downgrades reflect our view of a structurally unbalanced budget, following state income tax cuts that have not been matched with offsetting ongoing expenditure cuts in the fiscal 2015 budget,” Hitchcock wrote in a news release Wednesday morning.
Dave Trabert, president of the conservative Kansas Policy Institute, said the downgrade reinforces his arguments that the Sunflower State needs to get its fiscal house in order.
“We have to get away from this notion that cutting spending is reducing services,” Trabert told Kansas Watchdog. “You go and ask a reasonable sample of citizens ‘does government operate efficiently,’ and they’ll probably tell you in a lot of different ways ‘absolutely not.’”
Hitchcock wrote that should Kansas enact spending reductions to facilitate a more structurally sound budget in FY2016, “we could revise the outlook to stable.”
Trabert asserts that while Gov. Sam Brownback’s tax reforms and reductions were a crucial first step, the state Legislature must find the political will to reduce spending to complete the process.
“A lot of folks are going to try and make political hay about it, but it would be a big misleading statement to say tax reform is bad,” Trabert said. “You’ve got to be honest about it and say not getting spending under control is the problem.”
However, one thing is for sure: The lowered credit rating means Kansas will have to shell out more cash to borrow money in the future. Neither Hitchcock nor Kansas’ budget director, Shawn Sullivan, could be reached for comment Wednesday morning to detail exactly what that impact could be.
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