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April 12, 2023

WATCH: Yellen holds news conference during worrying IMF-World Bank spring meetings

WASHINGTON (AP) — U.S. Treasury Secretary Janet Yellen held a information convention Tuesday as the outlook for the planet overall economy this year has dimmed in the deal with of chronically higher inflation, growing fascination charges and uncertainties resulting from the collapse of two massive American banking institutions.

View Yellen’s remarks in the player previously mentioned.

That is the check out of the International Financial Fund, which on Tuesday downgraded its outlook for world financial advancement. The IMF now envisions development this yr of 2.8 {515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502}, down from 3.4 percent in 2022 and from the 2.9 {515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} estimate for 2023 it produced in its previous forecast in January.

The fund reported the chance of a “hard landing,” in which mounting interest rates weaken expansion so significantly as to trigger a economic downturn, has ”risen sharply,” specifically in the world’s wealthiest international locations. Those circumstances are also growing the challenges to world wide financial stability, the fund warned.

“The scenario continues to be fragile,” Pierre-Olivier Gourinchas, the IMF’s main economist, told reporters Tuesday. ”Downside dangers predominate.”

The IMF, a 190-region lending business, is forecasting 7 per cent world inflation this calendar year, down from 8.7 p.c in 2022 but up from its January forecast of 6.6 percent for 2023.

“Inflation is a great deal stickier than expected even a handful of months back,’’ Gourinchas wrote in the IMF’s latest Environment Economic Outlook.

Persistently higher inflation is envisioned to force the Federal Reserve and other central banks to keep boosting rates and to maintain them at or close to a peak lengthier to beat surging selling prices. These ever-better borrowing expenditures are predicted to weaken financial growth and probably destabilize banking institutions that experienced appear to count on traditionally lower charges.

Study A lot more: Global economy ‘likely to get even worse in advance of it gets better’ warns IMF

Currently, Gourinchas warned, increased costs are “starting to have major aspect effects for the economical sector.’’

The fund’s once-a-year Worldwide Economical Security Report, also unveiled Tuesday, issued tips for intercontinental decisionmakers:

“Policymakers might require to change the stance of monetary coverage to assistance money stability” — that is, probably rethink the speed of interest charge hikes that are meant to neat inflation.

The fund foresees a 25 {515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} probability that world expansion will tumble under 2 per cent for 2023. That has took place only 5 periods given that 1970, most just lately when COVID-19 derailed world-wide commerce in 2020.

The IMF also envisions a 15 p.c chance of a “severe draw back scenario,” normally related with a international recession, in which worldwide economic output for every human being would shrink.

The global financial system, the fund warned in Tuesday’s report, is “entering a perilous phase throughout which financial growth continues to be small by historical specifications and fiscal threats have risen, nonetheless inflation has not yet decisively turned the corner.”

The IMF issued modest upgrades to the economies of the United States and Europe, which have proved much more resilient than expected even with a great deal bigger fascination rates and the shock of Russia’s invasion of Ukraine.

The fund now expects the United States, the world’s major economy, to grow 1.6 per cent this year, down from 2.1 p.c in 2022 but up from the 1.4 p.c growth that the IMF experienced predicted in January. A robust U.S. position current market has supported steady consumer spending inspite of bigger borrowing charges for homes, automobiles and other big buys.

Yellen shared a additional optimistic see Tuesday on the state of the U.S. overall economy and the banking process, which she states “remains audio.”

Read Additional: IMF raises anticipated advancement for the global economic system in 2023

“I would not overdo the negativism about the global overall economy,” she reported. “I consider nations have demonstrated resilient, and a amount of emerging-industry and lessen-revenue nations continue to present resilient progress.”

She pointed back again to her statements during Group of 20 meetings in February in India.

“I stated that the world wide economic system was in a much better put than lots of predicted last drop,” Yellen claimed. “That primary photograph remains mostly unchanged. However, we remain vigilant to the draw back hazards.”

For the 20 nations that share the euro forex, the IMF foresees lackluster expansion of .8 per cent. But that, also, marks a slight enhance from its January forecast. Even though Europe has endured from the wartime cutoff of Russian organic gas, a incredibly heat weather conditions diminished demand from customers for electricity. And other nations, such as the United States, have been nimbler than anticipated in delivering purely natural fuel to Europe to switch Russia’s.

China, the world’s second-greatest overall economy, is expected to develop 5.2 per cent this year, unchanged from the IMF’s January forecast. China is rebounding from the stop of a draconian zero-COVID coverage that had stored folks house and experienced hobbled financial activity.

In the United Kingdom, wherever double-digit inflation is straining family budgets, the financial state is envisioned to contract .3 p.c this year. But even that is an improve from the .6 per cent drop that the IMF had predicted in January for the U.K.

In the producing planet, the IMF downgraded expansion prospects for India, Latin America, the Middle East, Sub-Saharan Africa and the much less-made countries of Europe. Ukraine’s war-ravaged economy is forecast to shrink by 3 percent.

The world overall economy has endured shock soon after shock in the previous a few yrs. Initially, COVID-19 introduced world-wide commerce to a in close proximity to-standstill in 2020. Future arrived an unexpectedly robust restoration, fueled by large federal government assist, specifically in the United States. The astonishingly effective rebound, nevertheless, brought on a resurgence of inflation, worsened just after the Russian invasion of Ukraine drove up charges of strength and grain.

The Fed and other central banks responded by aggressively elevating prices. Inflation has been easing, though it remains perfectly higher than central banks’ targets. Inflation is specifically intractable in providers industries, where by worker shortages are placing upward stress on wages and prices.

Increased premiums have induced challenges for the economical process, which experienced grown used to terribly reduced interest premiums.

On March 10, Silicon Valley Lender unsuccessful after making a disastrous guess on falling rates and absorbing major losses in the bond marketplace, news of which activated a financial institution run. Two times later, regulators shut down New York-primarily based Signature Bank. The failures were the 2nd- and 3rd-largest in U.S. background. In the wake of the problems, U.S. banks are predicted to slice back on lending, which could damage economic development.

Darrell Duffie, a finance professor at Stanford University, prompt that the “weakness in banking companies brought about by Silicon Valley has currently performed some of the Fed’s function in managing inflation.”

“Regulators want to pay out a great deal closer awareness to the security and soundness of financial institutions and improve their procedures and supervision,” Duffie stated.

January 5, 2023

Four things to watch out for in the Middle East in 2023

Editor’s Note: A version of this story appears in today’s Meanwhile in the Middle East newsletter, CNN’s three-times-a-week look inside the region’s biggest stories. Sign up here.

Abu Dhabi, UAE
CNN
—

The event that dominated the world’s news agenda in 2022 was the Ukraine war and its far-reaching repercussions. Its impact was felt deeply in the Middle East, with the region’s energy supplies, strategic waterways, and even weapons industries playing a key role in the war.

Last year saw adversaries of the West strengthening ties with Middle Eastern states, sometimes at the West’s expense. Gulf Arab states, keen to remain neutral in what they saw as a world order moving towards multipolarity, found themselves in an awkward position with their traditional allies in the West when asked to choose sides in the Ukraine war.

The war also – perhaps inadvertently – pushed Arab oil producers closer to Russia at the OPEC oil cartel, inviting the United States’ wrath. And as China’s relations with the US frayed, they continued to strengthen with Saudi Arabia.

But even as the Middle East’s ties with the West fluctuated, its relevance remained intact and perhaps even grew. Europe increasingly looked to the region for energy security. Qatar, which hosted the 2022 World Cup, is set to become an even more significant gas supplier to Europe in the coming years.

Meanwhile, two Middle Eastern neighbors, Iran and Turkey, supplied opposing sides of the war in Ukraine with drones that had a significant impact on the battlefield.

The war saw Ankara’s international prominence grow, whether through its attempts to mediate between the warring parties or its grandstanding at NATO that stalled the alliance’s expansion. All that gave a domestic boost to President Recep Tayyip Erdogan as Turkey’s economy reeled from an inflation-driven downturn.

Here’s what to watch out for in the Middle East in 2023:

President Erdogan had set an ambitious set of goals for his nation in its centennial. But as the Turkish republic celebrates its hundredth year in 2023, Erdogan may find himself focused instead on trying to hold on to his seat.

The Turkish lira has been plummeting in value for four years and the cost of living has been skyrocketing as a result of Erdogan’s unorthodox and widely criticized monetary policies that have shied away from raising interest rates to curb inflation.

Coupled with years of governance fatigue and a new generation of voters who are looking for change, 2023 could potentially mark the decline of Erdogan’s grip on power.

Elections, which are expected to take place in early summer, had dominated Turkey’s domestic agenda for much of last year. For the first time in years, the opposition – at least for now – seems united around fielding a candidate that could unseat Erdogan. Last year saw the president suffer a major setback in opinion polls, with his approval rate slipping. The presidential system, engineered and implemented by Erdogan himself, requires a 50{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} plus 1 majority in elections – a tough proposition for the leader as the economy slows.

On the international front, the key NATO ally continues to struggle through its uneasy alliance with the US and Europe. The US’ ongoing support for an armed Kurdish group in Syria that Turkey views as a national threat and a cold personal relationship between Erdogan and US President Joe Biden underscore the tense relationship.

Unresolved disputes with Greece over sea borders in the Mediterranean as well as a war of words over a Greek military deployment in small Aegean islands close to Turkey continue to raise tensions with Europe. Whether or not the relationship with Europe can grow beyond cooperation over keeping migrants and refugees confined to Turkey will depend on finding common ground.

When it comes to Ukraine, the Turkish position, regardless of who is victorious in the elections, will remain largely unchanged. The policy of “pro-Ukrainian neutrality,” as it is called locally, has paid off with a globally impactful grain deal and has kept the Turkish economy from taking further blows.

By Gul Tuysuz

Israel has a new government, and although it’s led by a familiar face – Benjamin Netanyahu – it is made up of some of the most extreme right-wing figures to hold ministerial positions in Israeli history. Especially of note are Itamar Ben Gvir, national security minister in charge of Israeli police, and Bezalel Smotrich, finance minister who will have a say in the policies that affect the movement of Palestinians in the occupied West Bank. Both are right-wing settler-lawyers turned politicians who were once considered the far fringe of Israeli politics.

These ministers are setting off alarm bells for many in the international community, including the United States, who are concerned their actions could further deteriorate the security situation on the ground. Ben Gvir and his ilk have openly talked about changing the status quo at Jerusalem’s holiest site – known as Temple Mount to Jews and Haram al-Sharif to Muslims – where only Muslims are permitted to pray. But actions in the compound in the past have sparked an uprising and even a war.

Then there’s the West Bank, where Smotrich will have a big hand in determining policy. Last year was the deadliest for both Palestinians and Israelis in decades. Security cooperation between the Israeli military and the Palestinian security forces, which has long been seen by Israeli leaders as a key to keeping the West Bank calm, was already strained last year.

Netanyahu has always run his governments as a one-man show, often de facto taking on such roles as that of the foreign minister. In recent interviews, he has repeatedly claimed that he and his Likud party will dictate policy. But allies, like major Jewish figures in the US, are concerned Netanyahu has built something he won’t be able to fully control. One of the biggest questions is how the Biden administration will work with the Israeli government – and if it will even interact with the two controversial ministers. So far, the US is taking a wait-and-see approach, with Secretary of State Antony Blinken saying in December that the US will judge the Israeli government “by the policies it pursues rather than individual personalities.”

By Hadas Gold

When the OPEC+ cartel of oil-exporting nations including Saudi Arabia and Russia decided in October to cut production by two million barrels a day, it was seen by observers as a political gamble on the part of Riyadh, the group’s de facto leader. The larger-than-usual cut was interpreted in the US as an attempt to raise oil prices ahead of midterm elections as the West tried to choke off the Russian oil revenues that were funding the war.

But just weeks after the cuts, oil prices dropped to pre-war levels amid concerns about a looming global recession and a slow Chinese exit from Covid-19 lockdowns. The drop prompted Saudi Energy Minister Prince Abdulaziz bin Salman to reiterate that the cartel’s decision was right and not politically driven.

That price drop created confidence in the prince’s guidance of the group, said Amena Bakr, Chief OPEC Correspondent at Energy Intelligence, an energy information company. “I expect 2023 to be a year where OPEC+ remains very much united,” she said, adding that a globally isolated Russia needs the alliance and is likely to go along with the group’s decisions.

An uncertainty that may persist into 2023, however, is how the price caps imposed by Western nations on Russian oil in December may affect the market and in turn the price of global oil.

As a result, Russia has said that it may cut production by up to 700,000 barrels a day. But Energy Intelligence predicts that Russian crude and condensate production could drop by as much as 1.2 million barrels a day, said Bakr. That’s over 1{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} of the global supply. If a gap emerges in the market, the cartel could even consider adding more barrels, she said.

Gulf states are also likely to become important providers of gas to Europe as it weans itself off Russian supplies. Qatar signed its first gas agreement with Germany in 2022 and another one with France, while neighboring UAE also signed gas deals with Germany and Austria. The country has also been touted by European officials as a future exporter of renewables to Europe.

By Abbas Al Lawati

As the international community was consumed by Iran’s regional ambitions and the never-ending nuclear negotiation last year, an entire generation of repressed women at home shook the foundations of the Islamic Republic.

After 22-year-old Mahsa Jina Amini died while in the custody of the nation’s notorious morality police, the government found itself facing protesters in the streets of almost every major city in one of the strongest challenges to the Islamic Republic since the 1979 revolution that brought it to power.

Those protests, and Iran’s support for Russia’s invasion of Ukraine, further complicated Tehran’s relations with the West, making an elusive nuclear agreement even more difficult to achieve. How the protests play out could dictate the course of the Islamic Republic’s domestic, regional and foreign relations in 2023.

The momentum of the protests has slowed, and while the government actively works on a deterrence strategy, it is clear that a barrier of fear has been broken.

But if domestic woes were not enough for the Islamic Republic, it is now also dealing with shifting international geopolitics, including a burgeoning Chinese-Saudi partnership and a Russian ally that is now completely embroiled in a protracted war.

The continuation of crippling Western sanctions on Iran has pushed it further east to China, its biggest trade partner. In 2021, a 25-year strategic “cooperation” pact worth $400 billion of investment deals was signed between the two nations. But as Saudi Arabia and Iran remain diplomatic enemies, and as Saudi Crown Prince Mohammed Bin Salman warms up to Xi amid a Saudi quarrel with Biden over OPEC, the developing China-Saudi relationship, and its effect on the Islamic Republic, is one to watch in 2023.

Regionally, Iran’s archenemy, Benjamin Netanyahu, is back in power in Israel, with his attention firmly on Tehran’s nuclear program.

With an ailing Supreme Leader, Iran’s leadership could be looking to firm up his successor, and as the elite Quds Force mourns the third anniversary of the loss of its leader Qassem Soleimani, Iraq’s attempts to break away from Iran’s influence also remains a challenge for Tehran.

By Mostafa Salem

Iran police detain top-tier soccer players in raid on party

Iranian police briefly detained several unidentified top-tier soccer players in a raid on a party on New Year’s Eve where alcohol was served in violation of an Islamic ban, Reuters cited Iranian media as saying. The semi-official news agency Tasnim said several current players and former members of an unidentified top Tehran soccer club had been detained at the party. The YJC news agency said the gathering was a birthday party, and added that all those detained had been released except one person, who is not a soccer player.

Background: Drinking alcohol and mingling between sexes outside marriage are banned under Iran’s Islamic laws. Social restrictions are among the issues that prompted mass unrest in recent months, following the death in custody of a woman accused of violating the strict dress code.
Why it matters: Iran’s soccer players came under scrutiny by opposition activists for participating in the FIFA World Cup under the regime’s flag. The Iranian team refrained from singing the regime’s national anthem at one of the matches. Security forces at the tournament told CNN that families of team members were threatened with imprisonment and torture if the players fail to “behave.”

Dubai scraps 30{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} tax on alcohol sales as regional competition heats up

Dubai has suspended a tax of 30{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} on alcohol and dropped a license fee previously needed to buy alcohol in the city, two major retailers said. The changes took effect on Sunday to run for a trial period of a year, according to local media.

Background: Dubai’s economy has rebounded swiftly from the Covid-19 pandemic, with GDP growing 4.6{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} on the year for the first nine months of 2022. Tourism is a key pillar of the economy, and tourist numbers grew more than 180{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} in the first half of 2022 over the same period in 2021.
Why it matters: Dubai competes with neighboring Gulf cities to attract foreign tourists, talent and investment. Its status lately has been threatened by Saudi Arabia, which is investing billions of dollars in tourism, entertainment and sport. Over the past two years, the UAE has relaxed social restrictions to be a more attractive destination for foreigners. Dubai’s latest move is expected to further boost its appeal.

Qatar reintroduces negative PCR-test requirement for travelers from China

Qatar has reintroduced a 48-hour negative PCR test requirement for travelers arriving in the Gulf state from China, Qatar’s health ministry said Sunday. The changes will take effect from Tuesday.

Background: Qatar, which had imposed strict testing and quarantine policies during the pandemic, removed Covid-19 testing requirements for travelers in November ahead of the World Cup.
Why it matters: Qatar is the latest country to impose strict measures on travelers from China as Covid-19 cases rise in China. Chinese tourists often use Middle Eastern hubs like Doha, Dubai and Abu Dhabi to fly to the West. Dubai, which hasn’t yet imposed new measures on travelers from China, is a major destination for tourists from the country.

Palestinians dressed in Santa Claus outfits surf in the sea off the coast of Gaza City on December 29, 2022.

January 3, 2023

Five issues to watch in Kansas’ 2023 legislative session

Topeka

On the heels of a contentious election cycle, Kansas lawmakers will return to Topeka next week with dynamics largely unchanged from the past two years.

The GOP retained its supermajority in both legislative chambers despite losing one seat in the Kansas House, but the party will continue to clash with Democratic Gov. Laura Kelly, fresh off a tight but successful reelection bid.

As Kelly seeks to push her agenda – increased funding for special education, a food sales tax cut and medicaid expansion – Republican lawmakers will pursue their own goals including school choice expansions and steeper long term tax cuts.

Though both sides have indicated some appetite for compromise, Kelly has made it clear she plans to use her veto pen if necessary and legislative leaders have said her victory in November is not a sign Kansans support Democratic policies.

Here’s a preview of the issues to watch:

Education

Special education is all but guaranteed to dominate conversations about education in 2023.

A major point of Kelly’s reelection campaign was a promise to “fully fund” special education. State statute requires Kansas to fund 92{515baef3fee8ea94d67a98a2b336e0215adf67d225b0e21a4f5c9b13e8fbd502} of the excess costs of special education not covered by the federal government. However, the state has never fulfilled that obligation.

Public school advocates say the underfunding has stretched school budgets in an unsustainable manner, forcing districts to reallocate funds intended for the general student population to cover the needs of special education students.

While Kelly and Democrats have sought to steer surplus funds in other parts of the state budget to the issue, Republicans in the Legislature are resistant to sending more money to K-12 education, which already takes up around $6.4 billion in the state’s roughly $22 billion budget.

State Rep. Kristey Williams, an Augusta Republican who chairs the K-12 Budget Committee, advocated for taking a second look at the state statute surrounding special education and reallocating other funds going to schools for the purpose.

“I think the adjustment to the statute would solve a large percentage of the issue. I also think we can move money around in education,” Williams said. “If the districts feel like they want more money in special education then we can do some shifting.”

Williams and Kelly have said they plan to pressure the federal government to allocate more funds.

Republican lawmakers are also likely to, once again, pursue legislation that would allow parents to use public dollars to provide voucher-like-programs for private education. Williams said she hoped to pass legislation establishing educational savings accounts parents could use on private education, tutoring or homeschooling.

A “parents’ bill of rights,” which would grant more parental control over classroom curriculum, is also a priority for Republicans.

“I’m still hearing from parents throughout the state, I’m hearing from school board members who are concerned about how things are being controlled in the school board,” state Sen. Molly Baumgardner said. “I’ve already heard from Senate leadership that that’s something that they want to see addressed again so we’ll take a look at that.”

Kelly has been adamantly opposed to both, referring to the parents bill of rights as the “teacher demoralization act.”

Abortion

Though voters opted in August to preserve abortion as a protected right in Kansas, lawmakers are likely to pursue new legislation on the issue when they return to Topeka in January.

Lawmakers will seek policies that deal with the issue without dragging the state back into court including a constitutional amendment changing the way supreme court justices are appointed and funding of pregnancy centers.

In its December newsletter Kansans for Life, the state’s largest anti-abortion organization, outlined steps forward in the wake of their defeat.

The group’s primary legislative goal will be funding of crisis pregnancy centers, generally religiously affiliated centers focused on providing assistance to pregnant women and discouraging abortions. Crisis pregnancy centers are frequently criticized for deceiving women into thinking they provide abortions.

In the newsletter Jeanne Gawdun, the lobbyist for KFL, advocated for sending more money into the Stan Clark Pregnancy Maintenance Initiative, a small state grant program that provides funds to organizations providing services to pregnant women including crisis pregnancy centers.

“With ever-increasing numbers of abortion-seeking women coming to Kansas from out of state, it is more important than ever that PRCs have the financial support they need to reach out to these women,” Gawdun wrote.

Hawkins, the House speaker-elect, has indicated support for these policies. He also told reporters last month he anticipated pursuing legislation aimed at helping fetuses that survive an abortion.

The Wichita Republican said the Legislature would have to be mindful to pass bills that would not bring them into court.

“In all of my 10 years there’s always been an abortion ban bill every year, does it get heard, no. But there’s always a bill that’s introduced,” he said.

“You have to do something that you think has a chance of passing muster. There are some things out there that could be done that may have nothing to do with abortion bans.”

Medical marijuana

Kansas is one of 13 states that has not legalized marijuana for medicinal use. It is one of just three that does not have a program for CBD with low THC levels, according to the National Conference of State Legislatures.

Kansas is surrounded on three sides by states that permit either medicinal or recreational marijuana use but the issue has been stalled in the state Legislature. Missouri voters opted in November to legalize recreational marijuana statewide, which will likely put more pressure on Kansas to reconsider its strict prohibition.

In 2021 the Kansas House of Representatives approved a bill that would have legalized medical marijuana in a limited manner. When the bill moved to the Senate for the 2022 Legislative session, however, it stalled.

An interim committee spent the fall studying the issue but it is unclear whether it stands a reasonable chance at passing in 2023.

Masterson, the Senate president, has not ruled out acting on the issue but even has consistently said it is not a priority for him or the members of his caucus even as outside pressures increase.

Meanwhile, Hawkins told reporters earlier this year he did not plan to push the issue unless the Senate moved first.

“There’s no reason for the House to do it again and then have it go over to the Senate and sit there for two more years and nothing happens,” he said.

If a version of medical marijuana passes in Kansas it would be an extremely limited bill. Lawmakers are highly cautious of legislation that would open the door to recreational use and view the wide availability of medical marijuana in states like Oklahoma as a cautionary tale.

Budget

Kansas is projected to end the current fiscal year in June with $2.3 billion on hand. Like other states nationwide Kansas is benefiting from higher than expected revenues and windfalls from federal COVID-19 relief dollars.

Kelly and legislative leaders have advocated for a cautious approach to the surplus funds – funneling the money towards paying down debt in the state’s pension fund, funding one-time expenses and growing the state’s rainy day fund.

The Democratic governor will release her budget priorities at the start of session.

Her budget is expected to include funding for Medicaid expansion, Kelly’s biggest policy priority that went unfulfilled during her first term. Kansas is among the last 11 holdout states to expand coverage.

Kelly has long advocated for expansion, submitting various proposals to the Legislature. But the policy is considered dead on arrival in the conservative supermajority led in the Kansas House by Rep. Dan Hawkins, a Wichita Republican adamantly opposed to expansion.

Kansas Senate President Ty Masterson, an Andover Republican, told reporters last week he didn’t expect a compromise to be on the table this year even if the proposal included strict work requirements.

“I never say never,” Masterson said. “What the Legislature would accept as the best expansion would probably not be enough for the governor or vice versa.”

Taxes

Kelly’s budget is also certain to include funding allocations for tax cuts. Earlier this month, Kelly rolled out a tax cut package that included an immediate sales tax elimination for food, diapers and feminine hygiene products, reduced taxes on Social Security income and a sales tax holiday on school supplies in August.

Kelly advocated for an immediate cut to food sales tax in the 2022 session but lawmakers instead passed a gradual elimination that would begin to take effect in January.

Kelly characterized these cuts as strategic to provide the most relief to Kansans without harming the budget.

Masterson said he was pleasantly surprised by Kelly’s proposal but that the proposal to immediately eliminate the food sales tax was part of what would need to be discussed.

“She’s not too far off from what we have been talking about for a long time,” Masterson said about Kelly’s proposal to reduce income taxes on social security. “Looking at the nuts and bolts of what she’s proposed, there’s probably a solution.”

But Republicans may want to go further.

Republican lawmakers on the state’s interim tax committee recommended action earlier in December to eliminate the $75,000 cliff on Social Security taxes. Their full recommendation advocated for the eventual elimination of all taxes on Social Security and reduced — or eliminated — taxes on other retirement benefits.

State Sen. Caryn Tyson, a Parker Republican who chairs the Senate Taxation Committee, said she and Senate leadership plan to study and propose a bill changing Kansas’ income tax to a single tax bracket system.

“It does help move our tax formula into a simpler program,” she said. “You make $10,000, you make $100,000, you all pay the same percentage of that income.”

This story was originally published January 2, 2023 5:30 AM.

Katie Bernard covers the Kansas Legislature and state government for the Kansas City Star. She joined the Star as a breaking news reporter in May of 2019 before moving to the politics team in December 2020. Katie studied journalism and political science at the University of Kansas.

Education

Abortion

Medical marijuana

Budget

Taxes

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