Originally posted at Kansas Policy Institute.

​Kansas is finally gaining ground in the race for economic competitiveness.

According to the newly released Rich States, Poor States 2025 report by the American Legislative Exchange Council (ALEC), Kansas improved its economic outlook ranking from 30th in 2023 to 27th in 2024—and now to 23rd in 2025. That’s the state’s best performance in years, showing how pro-growth reforms are starting to pay off. Notably, this jump comes even before the latest round of income tax relief–by overriding Gov. Kelly’s needless veto of further tax reductions just last week–takes effect.

The ALEC-Laffer rankings are based on 15 forward-looking policy variables that shape a state’s economic trajectory, including tax rates, labor policy, and fiscal stability. Kansas moved up the list mainly because of efforts to flatten income taxes, maintain right-to-work protections, and remove specific barriers to business investment. And unlike high-tax states stuck at the bottom, such as New York (50th) and California (48th), Kansas is showing that it’s ready to compete.

But improving rankings only tells part of the story.
​
A true economic transformation requires sustained fiscal discipline. The Responsible Kansas Budget, released by us at the Kansas Policy Institute, shows that the state still has a serious spending problem. In FY 2025, the Kansas budget was $8.5 billion higher than if the state funds budget had increased by just the rate of population growth plus inflation since 2005 and $56 billion higher cumulatively since then.

Originally posted at Kansas Policy Institute. 

Kansas took a major step toward lasting, sustainable tax reform with the passage of Senate Bill 269—a forward-thinking bill that rewards responsible budgeting with gradual income tax reductions. Predictably, Gov. Kelly vetoed the bill before being overridden by the House and Senate during their annual Veto Session. This all veto-override back-and-forth seems somewhat predictable as the measure initially passed both chambers with veto-proof majorities. Now that Gov. Kelly was rightly corrected in her veto, Kansans should understand how this policy, if executed properly, could reshape the state’s tax code and fiscal future for the better.

Unlike previous attempts at tax reform that lacked spending control, SB 269 is grounded in fiscal discipline. The bill creates a mechanism for lowering individual and corporate income tax rates over time—but only if two key conditions are met:
​

1. State revenues must exceed inflation-adjusted 2024 revenue levels.
2. The state’s Budget Stabilization Fund must hold at least 15% of general fund revenues.
   
   

If those conditions are satisfied, tax rates would step down automatically each year as state revenues increase—eventually flattening the personal income tax to 4%, reducing corporate rates, and cutting bank tax rates to as low as 2.6%. It’s an innovative design that avoids past mistakes and ties tax relief to economic performance and spending restraint.

Americans for Prosperity-Kansas rightly praised the Legislature for prioritizing sustainable relief. State Director Elizabeth Patton said, “SB 269 makes our state more competitive, paving the path for a strong economic future.”

She’s right—and there are data to back it up.

According to our research at Kansas Policy Institute, Kansas’ general fund spending has grown by more than $2.5 billion since 2020—well above the rate of population growth plus inflation. This excessive growth has not translated into better outcomes. For example, student achievement remains stagnant, with roughly half of Kansas students below grade level in reading and math despite record-high K-12 spending.

SB 269 responds to that by incentivizing lawmakers to live within their means. If spending stays under control, taxpayers benefit. If not, rate reductions pause. I’ve long advocated for this kind of sustainable budgeting approach through the Sustainable Budget Project: tie spending to the maximum rate of population growth plus inflation and use surpluses to cut taxes—not grow government. If the general idea sounds familiar in The Sunflower State, check out our annual Responsible Kansas Budget. 

Critics argue that SB 269 doesn’t provide immediate relief. And it’s true—taxpayers won’t feel the impact this year. But that misses the bigger picture. This bill lays the foundation for real reform that can endure—not just through one legislative session, but for generations.

As Sen. Caryn Tyson put it, “We’re going to reign that growth in by creating a step-down.” And that’s exactly what Kansas needs: to shift from reactive policymaking to a proactive, principled approach.

Meanwhile, state budget forecasts are strong. General fund tax collections were more than $1 billion higher in FY 2023 than in FY 2020. Rather than hoard that surplus or expand programs that aren’t delivering results, SB 269 directs future excess revenue to flatten the tax code, giving back to the families and businesses that earned it in the first place.

And the structure isn’t just good policy—it’s good economics. Lowering marginal tax rates makes Kansas more competitive for investment, talent, and job creation. That means more opportunity for all Kansans—not just those lucky enough to navigate today’s complex tax system.

Governor Kelly made her choice: She blocked the path to a stronger, more competitive Kansas. Kansans deserve better than bloated budgets and overpromised programs. They deserve a tax code that grows with them—not against them. SB 269 is a smart step forward. Thankfully, the Kansas legislature limited the future excessive taxation of taking more of what citizens earn by overriding Gov. Kelly’s veto.

Originally published at Kansas Policy Institute.

​Kansas lawmakers are considering House Bill 2308 (HB 2308), which would create the Aviation and Innovative Manufacturing in Kansas (AIM-K) Act, a massive corporate welfare scheme. Supporters claim it will generate $21.38 in economic benefits for every $1 spent by the state over a decade, but that claim ignores economic reality. Government handouts don’t create new wealth—they redistribute taxpayer dollars, distorting the market and making it harder for businesses that don’t get special treatment.

HB 2308 would shower select industries—especially aerospace, electric vehicles, and hydrogen production—with tax breaks and subsidies, including:

Keeping 100% of payroll withholding taxes for 10 years, instead of contributing to state revenue.
There are 10% refundable capital investment tax credits, which means companies can get money back even if they pay little or no taxes.
Up to $5 million in workforce training subsidies, shifting costs from employers to taxpayers.
Sales tax exemptions on construction materials, reducing state tax collections.
A $1 million bonus for companies spending $20 million annually on Kansas suppliers.
While marketed as “economic development,” AIM-K picks winners and losers in the economy, benefiting politically favored corporations while leaving small businesses and workers to cover the costs.

The study backing AIM-K claims it will improve the economy with state spending on incentives with taxpayer money. That sounds great—until you realize it’s based on faulty assumptions.

Government spending doesn’t magically create economic growth. Every dollar the state gives away in incentives is taken from taxpayers or businesses that don’t get the deal. The study ignores opportunity costs—what that money could have done if left to businesses and consumers making free-market decisions.

Kansas has seen these inflated claims before. The Attracting Powerful Economic Expansion (APEX) program, passed in 2022, handed out massive tax incentives to a company that failed to meet job and investment expectations. These programs almost always overpromise and underdeliver.

Kansas already has a high tax burden, yet lawmakers continue to offer tax breaks to big corporations while small businesses and working families pay the bill.

Payroll tax retention means AIM-K companies keep employee tax payments instead of contributing to public services. This forces other businesses and individuals to pay more or endure service cuts. Meanwhile, companies not lucky enough to qualify for these incentives still have to pay full freight, making it harder for them to compete.

When governments interfere with the economy by picking winners and losers, they discourage organic business growth. True prosperity comes from a fair, competitive market where all businesses—not just the politically connected—can thrive.

Instead of funneling tax dollars into corporate welfare, Kansas should focus on policies that benefit all businesses and workers:

Lower taxes for everyone, not just a few companies. Cutting income taxes across the board encourages broad investment and job creation.
Reduce regulations that make it harder to do business, creating an environment where companies want to come to Kansas without needing incentives.
Control government spending by capping budget growth at population growth plus inflation, ensuring taxpayers aren’t funding unnecessary programs.
States like Florida have shown that low taxes and limited government support real economic growth. Kansas should move in that direction instead of relying on corporate handouts that rarely pay off.

KPI has repeatedly published on the failures of taxpayer-funded subsidies for businesses. These include the more than $1 billion to Panasonic, hundreds of millions to Integra, or when individual taxpayers paid more so that some favored industry got a break.  

HB 2308 is another example of failed economic planning. The $21 return-on-investment claim is bogus—ignoring how taking money from taxpayers reduces economic activity elsewhere. History has shown that these programs don’t work—businesses take the incentives, stay for a while, and then leave once the subsidies run out.

Instead of propping up politically favored industries, Kansas should focus on lower taxes, responsible spending, and a level playing field for all businesses. That’s how to support real, lasting prosperity.