Can't wait to read your response Tim...............just don't use the excuse that R economics are misunderstood. Brownback already tried that one and people are laughing. ;)
S&P downgrades Kansas bond rating; Brownback pushes back
By Bryan Lowry
Eagle Topeka bureau Published Wednesday, August 6, 2014, at 11:36 a.m.Updated Thursday, August 7, 2014, at 7:16 a.m.
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 Charlie Riedel/ Associated Press
Kansas Gov. Sam Brownback speaks to the crowd at a Johnson County Republicans election watch party Tuesday, Aug. 5, 2014, in Overland Park.
 Thad Allton/ Associated Press
Democratic gubernatorial candidate Paul Davis did not face a primary challenge Tuesday, but he did take the opportunity late Tuesday, Aug. 5, 2014, to speak to supporters, volunteers and reporters in Topeka. Davis asked his supporters to sign up to volunteer during the final three-month stretch of the campaign.
TOPEKA — Standard & Poor’s became the second agency to lower Kansas’ bond rating Wednesday, citing an unbalanced budget caused by income tax cuts.
Gov. Sam Brownback dismissed concerns about the downgrade, the second since May, but the issue is likely to add fuel to Democrats’ claims that the state’s finances are in trouble as the general election approaches.
The rating agency lowered the state’s bond rating to AA from AA-plus and the state’s appropriation-secured debt to AA-minus from AA. The action comes on the heels of a downgrade by Moody’s Investor Services in May that also cited the tax cuts.
“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,” said Standard & Poor’s credit analyst David Hitchcock in a news release.
The rating agency gave the state a “negative” outlook on both ratings and projected that the state will face serious budget woes by the end of fiscal year 2015.
The outlook “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,” Hitchcock said.
Though the state’s bond rating is still high, the downgrade is a signal to investors that Kansas bonds are a riskier investment than they were before tax cuts.
At a Republican unity gathering Wednesday in Topeka, Brownback pushed back against the downgrade, accusing the ratings agencies of not understanding the state and of making faulty analyses.
“You know, breaking addictions to high taxes is hard. That’s a difficult thing to do. And that’s what we’re trying to do, is break addictions to high taxes,” Brownback said.
“We’re putting those dollars back into the economy and the bond rating agencies don’t like you cutting taxes,” he said. “We will repay the bonds to investors. These are still high-grade bonds. … It is hard cutting taxes, and we are doing it to create jobs.”
When asked if he thought the agencies’ analyses were wrong, Brownback replied, “They are for Kansas. Absolutely.”
Rep. Jim Ward, D-Wichita, one of Brownback’s harshest critics in the Legislature, chastised the governor for this reaction.
“When presented concrete evidence of a fiscal crisis … he denies it exists. He blames the people who bring the data. You cannot live in a world where you reject all information that doesn’t feed into your ideology,” Ward said in a phone call.
‘Bad news after bad news’The downgrade comes the day after Brownback posted a disappointing performance in his primary election. Relatively unknown candidate Jennifer Winn was able to take 37 percent of the vote despite raising less than $14,000.
Paul Davis, the Democratic nominee for governor, has repeatedly said the state’s finances are in trouble because of Brownback’s policies, and the downgrade gave him another piece of evidence.
He issued a statement saying the ratings change “is terrible news for Kansas and is further evidence that the Governor’s economic experiment has failed.”
Chapman Rackaway, a professor of political science at Fort Hays State University, said he thought the downgrade would hurt Brownback politically.
“Symbolically it’s bad for Brownback. It’s bad news after bad news,” Rackaway said, referring to Winn’s strong primary performance. He said the ratings change would help bolster Davis’ narrative about the state’s finances, but that its immediate impact would be limited.
“It means that we’ve gone from the best possible risk from investment to a really good risk for investment,” he said. “It shows a downward trajectory where if it were to continue – if numerous downgrades were to happen – then any community that wanted to bond an issue … that on down the line could endanger those.”
“But there’s no one who should worry about a Kansas bond right now being anything other than a sound investment,” he added.
Paying bills on timeRepublican State Treasurer Ron Estes echoed that view at the unity gathering.
“I think S&P is kind of following Moody’s lead. They all kind of want to put the same ratings on there,” he said, adding that he remained confident about the state’s ability to pay its bills long term.
“Since July 2011, we’ve paid all of our school bills – which is one of the biggest things that the state’s responsible for – for the full amount on time,” Estes said. “And I expect us to continue paying the bills on time. That’s really what the rating agencies would look for is making sure that your bills are paid on time.”
Senate President Susan Wagle, R-Wichita, who drove up to Topeka for the unity event, suggested that the downgrade was caused partially by the state’s unfunded liability in the pension system, a problem inherited from previous administrations.
However, she said the other question was whether one believes in supply-side economics.
“Do you think it’s better to have money in people’s pockets or money in the government coffers?” she asked.
“And we believe here in the state that we want to put it back in people’s pockets and that will ultimately grow the economy as soon as we can get some of these federal regulators off our back,” Wagle said. “And as soon as people have confidence in our economy, we’re going to have explosive growth in Kansas.”
Ward said conservatives were being delusional about the state’s finances and added that Winn’s performance in the primary is a sign moderate Republicans agree.
“When a woman – a very nice woman – gets 100,000 votes with the name ‘Not Brownback,’ that’s a red flag. And why it’s a red flag and why this lady got 100,000 votes is exactly the kind of thing he did this morning,” Ward said.
What polls sayDemocrats have noted that the polling firm Survey USA had projected Brownback at 60 percent and Winn at 30 percent, with the rest undecided, 12 days before the election. The final total of Brownback at 63 percent and Winn at 37 percent matches closely to that poll.
The same poll – which the Brownback campaign called bogus – showed Davis leading Brownback 48 percent to 40 in the general election, with Davis getting 29 percent of Republican voters.
Wagle said Winn’s supporters did not represent a unified coalition. She said the anti-incumbent vote reflected the electorate’s worries about the national economy.
“There’s tremendous unrest out there and I do not see in Jennifer’s support a coalition of any one group that stood together and said, we’re going to do this,” Wagle said. “I think Republicans are going to come home. I think the people who voted for her had very diverse reasons. … I think we’ll easily bring them back and elect Sam in November.”
Before the primary Rackaway said that if Winn got 25 percent of the vote alarm bells should go off for the Brownback campaign. He said her 37 percent total should make the Brownback campaign “profoundly scared.”
“This is their base vote. This is their core,” Rackaway continued. “These are the folks who are supposed to support him, so if an entire third of his base is gone he’s got to work that much harder to win them back in the general and he’s got to on top of that win over undecided and unaffiliated voters.”
“This is about as worst-case scenario for the governor as you can get,” he said.
Reach Bryan Lowry at  785-296-3006 or blowry@wichitaeagle.com. Follow him on Twitter: @BryanLowry3.
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