KHI News Service

Competing tax plans in play

House panel OKs alternative to governor’s proposal

By Jim McLean | March 13, 2013

The parameters of the debate over Gov. Sam Brownback’s tax plan are starting to take shape.

The Senate is expected today to take up the governor’s proposal, which includes incremental tax cuts and more immediate revenue raising measures aimed at keeping the state budget in the black. Approval of his plan is considered anything but certain despite the fact conservative Republicans generally aligned with him now control the chamber.

In a rare move, the governor pleaded Tuesday night with Senate Republicans to support his bill at a special meeting held outside the Statehouse at a downtown Topeka office building.

“That’s a big deal tomorrow on the tax vote. It’s needed,” Brownback told the senators, according to a report by the Topeka Capital-Journal.

GOP leaders closed the caucus meeting to the media shortly after the governor concluded his remarks so they could discuss strategy for today’s vote, according to the newspaper report.

The governor’s plan is controversial even among Republicans because while it would continue stepping down individual income tax rates it would also make permanent a sales tax increase approved as a stop-gap measure during the recession. Brownback proposes keeping the sales tax at 6.3 percent rather than dropping it to 5.7 percent in July and use the money it generates to fill projected holes in the budget caused by the income tax cuts approved last year. Those cuts, the largest in state history, substantially reduced individual income tax rates and eliminated them for certain types of business income.

Brownback’s new plan would also eliminate popular income tax deductions for mortgage interest and property taxes to raise needed revenue.

Rep. Richard Carlson, the Republican chair of the House Committee on Taxation, drafted an alternative to the governor’s plan after concluding a majority of House members were opposed to keeping the sales tax increase in place. Carlson’s alternative, which the committee endorsed Tuesday on a party-line vote, would replace scheduled reductions in income tax rates with a formula that would lower them in small increments in years when state revenues grow by more than 2 percent.

Rep. Arlen Siegfreid, R-Olathe

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Rep. Arlen Siegfreid, an Olathe Republican, was among several Republicans on the committee who expressed concern about how long it would take for tax rates to go down noticeably under the alternative proposal.

“If I live another five years what are the odds of me ever seeing a tax reduction in the state of Kansas because it looks to me like they’re close to zero,” Siegfreid said. “I’m sorry but the numbers trouble me a great deal.”

Based on current revenue projections, analysts on the committee staff said the first reductions probably wouldn’t occur until 2016 and those would be small.

Carlson also acknowledged that his alternative approach would slow to a virtual crawl the governor’s so-called “glide-path to zero” income taxes.

“If we’re not growing very much, taxes will not go down,” Carlson said.

Carlson said he supports eliminating state income taxes because he believes that would stimulate jobs and economic growth. But he said, “We have to go there in a responsible fashion.”

In addition to tying income tax reductions to revenue growth, the House’s alternative plan would delay $370 million in scheduled transfers to the state highway plan. Carlson said that money would be needed to balance the next two state budgets.

“We need ending balances in 2014 and 2015, that’s the hole we’re trying to fill,” he said.

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