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Feb. 4, 2013
TOPEKA Gov. Sam Brownback’s package of tax cuts and revenue increases is expected to face its first big test this week.
Senate Assessment and Taxation Committee Chairman Les Donovan said he would attempt to move to the Senate floor the governor’s tax bill and a measure intended to fix flaws in tax-cut legislation passed last year.
Donovan, a Wichita Republican, has said that several of his GOP colleagues who support the governor’s plan to gradually eliminate the state income tax may not be ready to vote for the governor’s proposed tax increases to balance the budget. The increases would come ahead of the cuts.
“The timing is going to be a problem for some people,” Donovan said.
Brownback seeks to plug a projected $503 million gap in the coming year’s budget by keeping on the books a 2010 sales tax increase that is scheduled to expire in July. He also has asked legislators to repeal long-standing income tax deductions for mortgage interest and local property taxes. Combined, the increases would generate about $540 million dollars for the state treasury, according to projections from the bipartisan Kansas Legislative Research Department.
Revenue Secretary Nick Jordan has urged legislators to consider the plan as a total package, promising that when fully implemented the additional income tax cuts would save most taxpayers more per year than they would pay due to the sales tax extension or could have claimed from the eliminated deductions.
The tax package would reduce the top individual income tax rate from 4.9 percent to 3.5 percent by 2017. It would take the bottom rate from 3 percent to 2.5 percent in 2014 and then to 1.9 percent in 2016. The proposed reductions would be on top of those approved last year as part of the largest tax cut in state history.
Brownback has said that he’s confident that economic activity generated by the income tax cuts eventually will produce enough revenue to fund the core functions of state government. But if those additional dollars don’t materialize, the state would be forced to deal with a $781.5 million shortfall by the 2018 budget year, according to the Legislature’s researchers.
That possibility has school administrators, university presidents and advocates for social safety net programs in a state of high anxiety, said House Democratic Leader Paul Davis.
“There is still a very large budget hole created in the out years and we have to be very careful that we don’t put ourselves in a situation where we have a permanent budget crisis and we are unable to fund the core functions of government that I think people expect us to deliver,” Davis said.
House Speaker Ray Merrick, a Stilwell Republican, has said the governor’s proposal may lack votes to pass even with large Republican majorities in both chambers.
“It may not be the solution, but we have to get out of here with a solution,” Merrick said.
The Kansas Constitution requires that lawmakers balance the budget.
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