TOPEKA – Tax group is closely monitoring labor shortages in state, but rebounding Kansas economy and improving income estimates lead members to believe state can afford adopt legislation reducing the tax on food sales.
The latest revenue estimates for Kansas raised the forecast to $ 2.89 billion, an increase of $ 1.3 billion from the previous April update. Gross domestic product is also up 19% in Kansas, and consumption, which makes up two-thirds of Kansas’ economy, is up 18%, said Donna Ginther, director of the Institute for Policy and Social Research at the University of Kansas.
With these improvements in the state’s bottom line, Ginther and others were confident that the state could afford proposals from Governor Laura Kelly and Attorney General Derek Schmidt that would reduce or eliminate the sales tax on food from the state. ‘State.
“The Wayfair decision, coupled with the closing of the loophole for market facilitators, has broadened our sales tax base, âGinther said. âThis provides an opportunity to reduce or potentially eliminate the state’s most regressive tax, the Grocery Sales Tax. “
Using research from a former student’s thesis, Ginther noted that reducing or eliminating the food sales tax has led to a decrease in food insecurity by up to 40% in some States. According to Feed America, about 1 in 8 people, including 1 in 6 children, go hungry in Kansas.
The governor’s plan to completely eliminate the tax on groceries would cost the state approximately $ 450 million in revenue.
Kansas’ improving financial situation has also led to optimism from some board members that the state could afford to expand Medicaid this next legislative session.
âI would say that’s a fair guess,â state budget director Adam Proffitt said in response to inquiries about the ability to fund Medicaid’s expansion.
A Kansas Health Institute report says private sector employers would save $ 39.6 million to $ 80.6 million if Kansas opted for the Medicaid expansion.
While there are some positive trends to celebrate, a labor shortage in Kansas will hamper further growth, Ginther said. She said an increase in retirements, difficulty accessing child care and low-paying jobs are behind this shortage.
By 2021, around 2 million people in the United States have retired and will not return to the workforce, according to a Deutsche Bank study. About 35,000 Kansans retired in the past year.
The risk of COVID-19 exposure and stronger retirement portfolios have led many Kansans at retirement age to choose to hang up their work boots for good, Ginther said.
Additionally, many young Kansans choose not to risk their health and safety for low-paying jobs, Ginther said. Evidence from the public administration sector suggests that the state will have to pay more to attract and retain workers.
Child care workforce and accessibility issues also remain in crisis statewide.
In September, more than 300,000 women left the labor market due to limited access to child care, exacerbating the shortage. Child Care Aware of Kansas said the state has lost about 300 licensed providers in the past year.
John Wilson, president of Kansas Action for Children, noted that the Build Back Better bill, passed by the United States House of Representatives earlier on Friday, would fund universal preschool for ages 3 and 4 and institute a ceiling on childcare costs of 7% of income. for parents earning up to 250% of a state’s median income.
“It would be interesting to see if once you can reduce the cost of child care for working families in Kansas if then we would still see pressures on our labor shortages due to wages.” Wilson said. “Maybe that would encourage the state to consider raising the minimum wage as well.”