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Originally published Jan. 30, 2013 at 6:46 p.m., updated Feb. 5, 2013 at 4:39 p.m.
TOPEKA Two conservative groups who have supported Gov. Sam Brownback’s efforts to eliminate the state income tax made it clear today that they do not support the other tax increases he is proposing to balance the state budget.
Kent Eckles, the chief lobbyist for the Kansas Chamber, told members of the Senate Assessment and Taxation Committee that the business group does not support making permanent what was intended to be a temporary increase in the sales tax to help the state weather the recession that began in 2007.
“We support where the governor is attempting to go on reducing income taxes,” Eckles said. “But we think we ought to look at other ways to get there.”
KHI News Service file photo
Eckles said the state should spend down its reserves and cut spending before asking taxpayers for more money.
Richard Cram, director of research and policy for the Kansas Department of Revenue, said extending the sales tax increase and eliminating income tax deductions for mortgage interest and real estate taxes would generate about $490 million for state government in the fiscal year that begins July 1.
That would almost be enough to close a projected $503 million budget gap created by income tax cuts approved by the 2012 Legislature and signed into law by Brownback last May.
Dave Trabert, president of the Kansas Policy Institute, a conservative think tank that lobbies for smaller government and lower taxes, also drew a line in the sand on the governor’s proposed tax increases. He said passing them would blunt the economic impact of the reductions in income tax rates, which constituted the largest tax cut in state history and became effective Jan. 1.
“Basically, what this bill is doing is taking back more than 50 percent of the tax burden relief that was passed by the House and Senate last year,” Trabert said, asserting that the tax increases would reduce $800 million in tax relief to a net $400 million.
Growing the Kansas economy will require both cuts in taxes and spending, Trabert said. A one-time, 8.5 percent cut in spending – approximately $500 million – would be a better way to balance the budget than raising taxes, he said.
“The key to keeping the tax burden down is to control spending,” he said.
Revenue Secretary Nick Jordan told the committee on Tuesday that the governor wanted to eliminate the income tax but do it in a “pragmatic way” that doesn’t result in deep cuts to core programs such as K-12 education and Medicaid.
Senate Bill 78, the governor’s plan, would further reduce the state’s 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.
Jordan urged committee members to view the governor’s budget and tax proposals as a package instead of a collection of take-it-or-leave pieces. He said the rate reductions ultimately would save most Kansans more than they would pay in additional sales taxes or claim through the eliminated deductions.
Sen. Les Donovan, the Wichita Republican who chairs the tax committee, has said if too many conservative Republicans join Democrats in opposing the governor’s package it would be difficult to pass. And he challenged Trabert’s contention that the Kansas Policy Institute was neutral on the bill.
“I think I’m going to officially change your testimony from neutral to negative,” Donovan said. “I think you might be an opponent because you don’t like this plan, it sounds like. Is that true?”
Trabert responded that the institute supports reducing income taxes, but “This is not the way to do it.”
“So, you don’t like this method and you don’t like the bill,” Donovan said.
Opponents to the bill scheduled to testify later include the Kansas Association of Realtors, the Kansas Building Industry Association, AARP Kansas and the Kansas Economic Progress Council, a business group that includes many former members of the Kansas Chamber.
The Kansas Association of School Boards will not be among the organizations testifying against the tax bill. Mark Tallman, the group’s lobbyist, testified in favor of the measure Wednesday because of the same tax increases that drew opposition from conservative groups.
“We are here as proponents for the very simple reason that we think the governor’s revenue components are necessary to fund the governor’s budget,” Tallman said. “Since the income tax cuts that were passed last year and signed. school districts have been very concerned about what that loss of revenue could mean for school funding.”
Editor's note: The Kansas Chamber is neutral on the governor’s proposals to eliminate income tax deductions for mortgage interest and real estate taxes — a position which was misstated in the original version of this story.
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