To Fight Poverty, Fight Budget Battles
In our home states of Kansas and Minnesota this spring, our elected leaders made some very different decisions with important implications for people striving to make it up the economic ladder.
Minnesota boosted investments in education and other areas critical to promoting widespread prosperity and creating jobs in a fiscally responsible way, funding those investments with tax code changes primarily focused on those most able to pay.
Kansas, meanwhile, doubled down on destructive tax cuts that mostly benefit the wealthiest households, leading to further erosion of state support for schools and other drivers of economic progress.
Our two states presented vastly different climates in which we and other advocates for economic opportunity and security operated: In Minnesota, we had the chance to take a step forward for families and communities, while in Kansas, our goal was to hold onto what remains of our state’s proud tradition of supporting progress and opportunity.
But despite their differences, our states have something in common: key 2013 policy victories that will improve the lives of thousands of low-income families and help them regain some of the ground lost during the Great Recession and subsequent anemic recovery.
We and many others in Kansas and Minnesota share a strong understanding of how important state tax and budget policy is to the work of helping people get to the middle class and not fall back down. How our states raise and spend money is a statement of values and has a huge impact on people۪s lives.
Minnesota increased access to quality early childhood learning and made college more affordable through increased funding for financial aid as well as tuition freezes. The new state budget doesn۪t go as far as it could have to support low-income families, but there is hope for the future as the state will have a healthier revenue base to build on. This is thanks to a tax bill that raises additional revenue and makes the tax system fairer through an increase in state income taxes on high-income Minnesotans, ending some corporate tax preferences, and increasing property tax refunds for low- and middle-income households. These families have been paying more than their fair share to support public services at the state and local level.
Crucial to this effort was a broad-based coalition called Invest in Minnesota, which counts numerous advocates for low-income families among its members, including the state۪s Community Action agencies, the Joint Religious Legislative Coalition, and the Minnesota Coalition for the Homeless. These organizations provided crucial support for tax reform that not only raised important new revenue but also made the state۪s overall tax system fairer by tying it more closely to ability to pay.
The Minnesota Budget Project which conducts independent research and analysis on budget and tax issues, and plays a leading role in Invest in Minnesota helped these advocates understand the implications of various tax and spending proposals, provided localized data for the renters۪ property tax refund, and identified strategic opportunities in the legislative session so advocates would know the best time to press lawmakers.
In Kansas, victories for low-income families this year were few and far between because the governor and legislative majority have bled the state of resources through reckless tax cuts for wealthy people and profitable corporations. Touted as a boost to the state economy, the tax cuts have been anything but. Instead, deep cuts in support for education, healthcare and community mental health services have set Kansas back.
Despite this challenging environment, the work of anti-poverty organizations on tax and budget issues made a big difference. Kansas۪s Earned Income Tax Credit (EITC) a critical support for more than 200,000 working-poor families was targeted by our governor for a 50 percent cut that would have cost low-income, working Kansans more than $40 million. In response, two dozen advocacy groups formed the Partnership to Preserve the EITC. Using research provided by the Kansas Center for Economic Growth, these advocates were able to show lawmakers how many families relied on the EITC and the money it brought into the local economy. Such information helped prevent the EITC from joining a list of other tax credits that have fallen victim to the drive for lower taxes for wealthy Kansans.
What can other states learn from our disparate experiences? The lesson is that fighting poverty means paying attention to the big-picture battles over the budget. The message has to be: we can۪t reach our anti-poverty goals when we۪re forced to fight among ourselves for the pieces of a shrinking pie. We all have to work to make the pie bigger. Without adequate revenue, no program or service is safe from cuts or outright elimination. And even in states that have committed to raising more revenue, there۪s more to do so that adequate dollars go where they are most needed.
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Nan Madden is the director of the Minnesota Budget Project.
Annie McKay is the executive director of the Kansas Center for Economic Growth.
Both nonprofit organizations conduct research and analysis on tax and budget issues in their states and are members of the State Fiscal Analysis Initiative.
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